Homebuyer Affordability Holds Steady In Six Of Eight Cities In H1 2026, Says Report

India’s residential real estate market continued to demonstrate resilience in the first half of 2026, with homebuyer affordability remaining stable across six of the country’s eight major housing markets, according to the Knight Frank India’s Affordability Index report. The report highlights that the accumulative impact of a 125 basis point (bps) reduction in interest rates has helped sustain affordability levels despite rising residential property prices.

Six of the eight tracked cities continue to remain within the affordability threshold, where homebuyers spend less than 50 per cent of their household income on home loan equated monthly instalments (EMIs). However, the Mumbai Metropolitan Region (MMR) and the Delhi-National Capital Region (Delhi-NCR) continue to exceed this benchmark, making them the least affordable housing markets in the country, the report adds.

Ahmedabad retained its position as India’s most affordable residential market with an EMI-to-income ratio of 23 per cent in H1 2026. Kolkata followed closely at 25 per cent, while Pune recorded an affordability ratio of 28 per cent. Chennai remained at 29 per cent, Bengaluru at 35 per cent, and Hyderabad at 41 per cent, all comfortably within the affordability threshold, the report said.

At the same time, MMR continued to record the highest affordability ratio at 69 per cent, while Delhi-NCR registered 67 per cent. Bengaluru and Delhi-NCR witnessed a marginal deterioration in affordability compared to 2025, primarily due to sustained growth in residential property prices. Affordability levels in the remaining cities remained largely unchanged.

Knight Frank’s Affordability Index measures the proportion of household income required to service monthly home loan EMIs. An EMI-to-income ratio above 50 per cent is generally considered unaffordable, as lenders rarely underwrite mortgages beyond this level.

The report noted that housing affordability in India improved significantly between 2016 and 2021, supported by declining interest rates and accommodative monetary policy during the pandemic. However, affordability weakened in 2022 after the Reserve Bank of India (RBI) raised the repo rate by 250 bps to combat inflation. Stability in policy rates from early 2023 onwards helped arrest the decline, although rising residential prices continued to exert pressure on affordability in some markets.

More recently, the RBI has reduced policy rates by a total of 125 bps before pausing further action, with the Monetary Policy Committee (MPC) retaining the repo rate at 5.25 per cent during its February and June 2026 meetings.

While inflationary pressures linked to global geopolitical tensions and monsoon uncertainties remain, the lower borrowing costs continue to support homebuyers and residential demand.

“The cumulative benefit of lower interest rates continues to support homebuyers across most markets, helping sales remain close to post-pandemic highs. Over the years, affordability gains have moderated mostly due to the rise in property prices. However, healthy employment, stable incomes, and supportive financing conditions continue to underpin demand. Going forward, sustained income growth and balanced market fundamentals will be critical to maintaining housing affordability and supporting long-term market growth,” said Shishir Baijal, international partner, chairman and MD, Knight Frank.