Affordable Living: Bengaluru Homes Now Cheaper than Hyderabad

Knight Frank India’s 2024 Affordability Index determined that Hyderabad is now the second least affordable housing market in India, overtaking Bengaluru. An average household in Hyderabad pays 30% of its income toward home loan EMIs, which has been the case for the past three years. This puts Hyderabad beneath Mumbai, where the EMI-to-income ratio stands at 50%, thereby categorizing it as the least affordable housing market countrywide.

An affordability index reports the proportion of income that a household devotes towards housing loan EMIs in major cities. Ahmedabad made it to the cheapest list with a 20% PMI, while Pune came next with 25%, Kolkata at 27%, Bengaluru with 27%, and Chennai with 25%.

This figure for a housing loan in Bengaluru was slightly reduced, having made it down from 26% in 2023 to 27% in 2024. However, with a threshold of 50%, the city certainly remains within the affordable housing market, with an EMI-to-income ratio below this limit.

According to the authors of the report, steady income growth and stable interest rates neutralized the overall price increase of homes in all but Mumbai from 2010 to the present.

The general economic decade from 2010 to 2021 was marked by declining interest rates and growth, making affordability easier. With the pandemic on, arguably Repo rate was brought to its all-time low levels by the Reserve Bank of India, improving conditions of affordability in cities including Hyderabad, Mumbai, and Chennai.

However, from May 2022 till February 2023, the anticipated rate of rise in the repo rate by up to 250 basis points proved to be a drag on affordability.

Since February 2023, the Reserve Bank of India has kept the repo rate unchanged, so that rising household incomes have sustained affordability despite rising housing costs.

Mumbai alone exceeds the affordability threshold, with its EMI-to-income ratio improving from a whopping 67% in 2019 to 50% in 2024. Hyderabad, at 30%, has maintained that level over the last two years, documenting a continuous rise in housing prices and placing it as the second-most expensive housing market in the country.