Housing Affordability in India 2026: EMI to Income by City, Price to Income and Rates

Which is the most affordable city to buy a house in India?

Ahmedabad. Knight Frank India's Affordability Index for H1 2026 puts the EMI to income ratio there at 23%, meaning a typical household would spend 23% of its income on the monthly instalment for an average home. Kolkata follows at 25%, Pune at 28% and Chennai at 29%. Bengaluru (35%) and Hyderabad (41%) are dearer but still under the line.

Knight Frank treats 50% as the cut-off: above it a market is unaffordable, because banks rarely underwrite a mortgage where the EMI takes more than half of income. Only two of the eight cities fail that test in H1 2026. MMR is the least affordable at 69% and Delhi NCR is at 67%.

Compared with 2025, six cities were unchanged. Bengaluru slipped from 34% to 35% and NCR from 66% to 67%, as reported by Angel One. An IANS report of the same release gives NCR at 65%, so treat the exact NCR figure as 65% to 67%.

Why did Mumbai and NCR figures jump in Knight Frank's 2026 index?

If you followed this index last year, the 2026 numbers will look odd. In December 2025 Knight Frank said Mumbai's ratio had fallen to 47%, the first time in the index's history below 50%, and NCR was 28%. The July 2026 edition instead reports MMR at 69% for both 2025 and H1 2026, and NCR at 66% for 2025.

The likely reason is a change of geography and method: the 2026 edition uses the wider Mumbai Metropolitan Region, and the 2025 values it now quotes differ sharply from the ones published six months earlier. Knight Frank has not explained the change in the press coverage we could find. Our advice is simple: compare cities within one edition, not across editions.

Under the older series, affordability was improving steadily through 2025. Mumbai went from 50% in 2024 to 48% in H1 2025 and 47% for the full year; Chennai improved from 25% to 24% and then 23%; NCR edged the other way, from 27% to 28%, which Knight Frank linked to price rises in the premium segment.

How did repo rate changes affect home affordability?

Interest rates are the biggest short-term lever. RBI raised the repo rate by 250 basis points over nine months from May 2022, which worsened affordability across cities, according to Knight Frank as reported by IANS. It then cut the rate four times between February and December 2025, from 6.50% to 5.25%. That 125 basis point easing is what kept six of eight cities stable in H1 2026 even as prices kept rising.

The cycle has now turned. On 7 October 2026 RBI raised the repo rate back to 5.50% and changed its stance to calibrated tightening, citing inflation expected to average almost 5.8% over the next three quarters. SBI moved its home loan starting rate from 7.25% to 7.50% from 15 October 2026.

What does 25 basis points mean in rupees? On a ₹1 crore loan over 20 years, the EMI at 7.25% is ₹79,038 and at 7.50% it is ₹80,559, an extra ₹1,521 a month. Most floating rate borrowers will see their banks extend the tenure rather than raise the EMI, which costs more over the life of the loan.

What is the house price to income ratio in Indian cities?

RBI used to publish one through its Residential Asset Price Monitoring Survey, based on actual home loans across 13 cities. In March 2019, the last round it released, the median house cost 61.5 times the buyer's monthly income, or about 5.1 years of income, up from 56.1 times in March 2015. RBI described this as worsening affordability. Mumbai was the least affordable at 74.4 times monthly income and Bhubaneswar the most affordable at 54.3. Delhi was 58.5.

The same survey found the median loan was 3.4 times annual income in March 2019, up from 3.0 in 2015, and that lenders were funding a larger share of the price, with the median loan to value ratio rising from 67.7% to 69.6%. These numbers are seven years old, so use them for the pattern, not the level. Since then RBI has stopped releasing the survey, which is why most current affordability talk relies on Knight Frank's EMI based index.

Why is NCR so expensive relative to incomes?

NCR's problem is product mix as much as price per sq ft. Anarock's Q3 2026 data puts the average NCR price at ₹9,980 per sq ft, well below MMR's ₹17,950, yet 62% of new NCR launches that quarter were priced above ₹1.5 crore and 34% above ₹2.5 crore. Only 33% were in the affordable and lower mid bands, against 51% in MMR. Kolkata sits at the other end, with only 4% of launches above ₹1.5 crore.

Gurgaon drives much of this. Most new supply on Golf Course Extension Road, Dwarka Expressway and the Southern Peripheral Road is in large-format 3 and 4 BHK homes, so the average NCR ticket is pulled up even if a buyer's own budget is modest. For a salaried family, the realistic route is often resale stock, builder floors or New Gurgaon rather than new launches on the premium corridors.

Is housing becoming more or less affordable in 2026?

Through mid-2026 it was roughly flat: lower rates offset higher prices. RBI's House Price Index rose 3.6% in the year to April to June 2026, a modest pace nationally, while Anarock's top seven city average rose 7% to ₹9,714 per sq ft in Q3 2026. Knight Frank's chairman Shishir Baijal said lower rates had supported buyers in most markets, though rising prices had eroded some of the gains.

For the rest of 2026 the balance is less friendly. Rates are rising again and inflation is forecast to average close to 6% for three quarters. Unless incomes rise faster or prices pause, expect the EMI to income ratio to tick up in the next edition of the index, most of all in MMR and NCR, which already sit above the 50% line.