According to a recent study by renowned property adviser Knight Frank India, Ahmedabad is India’s most economical place to live.
The EMIs a city resident must pay if they purchase a home with a home loan are divided by the average family income in that city to determine the affordability index, which Knight Frank provided.
The Knight Frank Affordability Index shows how much income a household needs to bring each month to pay the EMI on a housing unit in a specific city. Therefore, if a city has a Knight Frank Affordability Index score of 40%, households must spend 40% of their income on average to cover living costs.
Therefore, a city with a Knight Frank Affordability Index level of 40% means that households there must spend, on average, 40% of their income to pay the monthly installments on a home loan for that unit.
As the threshold beyond which banks rarely underwrite a mortgage, an EMI/Income ratio of more than 50% is seen as unaffordable.
Mumbai has the most costly housing market.
A typical household must spend more than half of its salary on mortgage payments in Mumbai because the city’s home loan EMI to income ratio is a staggering 55%.
The second most costly city is Hyderabad, with an EMI to income ratio of 31%.
The third-placed region is the Delhi National Capital Region, where home loan EMIs cost 30% of your salary.
Chennai, Tamil Nadu, is in second place with an EMI to income ratio of 28%.
Next, Pune in Maharashtra takes the fifth place, where an average household must spend 26% of their income on home loan EMIs.
In West Bengal, Kolkata has the same rate. Finally, Ahmedabad in Gujarat, where an average household must pay 23% of their income for home loan EMIs, is the most affordable Indian city to live in. This index has taken into account a fixed dwelling size across cities, a loan period of 20 years, and an 80% loan-to-value ratio.
