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Thinking of buying a home in India’s top 8 metro cities - Delhi, Mumbai, Kolkata, Pune, Bengaluru, Chennai, Hyderabad, Ahmedabad. Well for an average decent home you would need to earn a minimum 12-15 lakhs annually.
For a home costing 50 lakhs with monthly loan payment (EMI) not more than 30% of the salary and ideal loan tenure of 20 years, a person would need monthly earnings of 1.0 -1.25 Lakhs or annual salary of Rs 12-15 Lakhs.
For a little higher bracket of 1.0 Crore house, your annual income should be around Rs 60–65 lakh, or a monthly take-home pay of at least Rs 3.5 lakh, based on the idea that your EMI should be less than 20% of your monthly take-home pay.
The data from 2024 income tax return (ITR) filings show that that people with yearly income in the Rs 10-15 lakh income band comprise nearly 12% and only 9.39 lakh people earned over 50 lakh rupees per year in the population of 144 crores.
The statics itself reflects the number of individuals that can afford a mid-income segment property in a metro or a Tier1 city in India.
Deepening the affordability crisis is the annual price growth in double digits in all these 8 cities except Hyderabad where the YoY increase was 7% as per Q3CY2024 report.
Simultaneously, these cities are experiencing shortage of homes, due to fewer launches in 50 Lakh – 1.0 Cr bracket by the developers, which combined with rising demand has pushed home prices to new heights.
Topping the list of least affordable cities for housing in India in 2024 is Mumbai Metropolitan Region (MMR) - With a price-to-income ratio (P/I ratio) of 14.3. Followed closely by Delhi with a P/I ratio of 10.1 and Gurugram With a P/I ratio of 7.5. Cities like Ahmedabad, Chennai, Hyderabad and Kolkata are relatively more affordable for housing with P/I ratio in range of 5.1 -5.8.
In terms of new launches, Rs 1.5 Cr housing segment witnessed the highest new supply of 33%, followed by the Rs 80 Lakh –Rs 1.5 Cr segment with a 30% share. The segment of Rs 40– 80 Lakh homes contributed a 23% share, while below Rs 40 Lakh housing segment's share was just 13% of the total new supply in Q3 2024, as per industry reports.
Oxford Economics defines a home as affordable if the monthly payment does not exceed 28% of a person's income. While house prices increased in every metro, the rise in mortgage rates have eroded affordability more significantly with EMI-to-monthly income ratio reaching to 50% - 60% in some cities.
