Even after 1.25 points of rate cuts, Mumbai stays India's least affordable housing market

Knight Frank India, in its half-yearly Affordability Index released on Friday, said homebuyers in the Mumbai Metropolitan Region still spend about 69 per cent of household income on home-loan EMIs for a standard unit, unchanged from 2025 and the worst reading among India's eight largest markets. The National Capital Region followed at 67 per cent. Both remain above the 50 per cent threshold beyond which, the consultant notes, banks are generally reluctant to lend, effectively flagging the two regions as unaffordable on this measure.

The index tracks the share of monthly income a typical household needs for EMIs. Knight Frank credited the Reserve Bank of India's cumulative 125 basis points of rate cuts with cushioning affordability nationally, largely offsetting higher prices and keeping six of eight cities at or below the comfort line, with Ahmedabad, Kolkata and Pune among the most affordable. Mumbai's ratio has improved over the past decade but remains structurally high because of land and property costs.

Why it matters: affordability is the ceiling on how broad-based MMR's housing demand can be. Even with cheaper loans, a two-thirds income burden keeps large parts of the salaried middle class priced out of formal ownership, which helps explain why recent growth has skewed toward premium and investor-driven segments rather than mass end-users. It also frames the policy debate on stamp duty, ready-reckoner rates and affordable supply in the region.

This is a modelled ratio for a representative unit and income, not a citywide average of actual deals, so individual outcomes vary widely by location and budget. Knight Frank expects affordability to stay broadly stable through the second half of 2026, barring shocks to rates or incomes.