Home Purchase Affordability Index 2021

India’s housing market has never been more affordable
October 04, 2021
  • Samantak Das

Buying a home now is more affordable than a decade back as property prices have remained stagnant over the past many years, the interest rate on home loans has fallen to their 15-year low, and the average household income has witnessed a marginal rise. The trend is likely to continue in 2022 in most cities.

According to JLL’s Home Purchase Affordability Index 2021 report, the combination of three factors – household income, property prices and home loan interest rates – has made residential property most affordable since 2011.

In the current calendar year (CY), the household income increased by 7-9% (from the low base of 2020) in key residential markets - Mumbai, Delhi NCR, Bengaluru, Chennai, Pune, Hyderabad, and Kolkata.

Property prices, however, remained static in all prime residential markets, except for Hyderabad.

Mortgage rates are at the lowest in 15 years. Lower home loan interest rates translate to reduced equated monthly instalments for buyers, which has a significant impact on affordability.

The affordability in key markets has been getting better since 2014, according to JLL’s Home Purchase Affordability Index of 2019 and 2020. The third edition of the report comes when the country’s economy is recovering from the challenges of the second covid-19 wave.

Our analysis suggests that the increase in home purchase affordability is likely to continue in CY2022 in most markets.

HPAI is the ratio of the average household income. Eligible household income is defined as the minimum income that a household should earn in order to quality for a home loan on a 1,000 sq ft apartment at the prevailing market price.


Note: Refer to the Technical Note at the end of the report for the detailed approach and methodology

While residential prices could move up, mortgage rates are unlikely to increase in the following CY as the central bank would continue to focus on consumer spending. Consequently, overall home purchase affordability is expected to either remain similar or witness a marginal improvement from 2021 levels.

But the rising affordability does not necessarily translate into higher sales. Before purchasing a house, buyers decide based on the prevailing economic condition, employment scenario and their future income.

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