For years, Mumbai has been known as one of the most expensive places to buy a home in India. But now, the trend appears to be changing. A recent report by Knight Frank India shows that home buying in the country’s financial capital has become more affordable than it has been in the last 15 years. For the first time, the city’s affordability index has dipped below the 50% mark — a major milestone for aspiring homebuyers.
According to the Knight Frank Affordability Index 2025, a household in Mumbai now needs around 47% of its income to purchase a home. This is significantly lower than last year’s 50% requirement and a dramatic improvement from 2010, when families needed a massive 93% of their income to afford a property.
This shift signals a hopeful environment for the middle class, making homeownership more achievable than ever.
Banks use affordability metrics to determine the safety of issuing home loans. When affordability exceeds 50%, they become more cautious and may hesitate to approve loan applications. Falling below that threshold indicates a stronger financial environment where more people can safely take loans and invest in housing.
For Mumbai, this change is a turning point — opening doors for thousands of families who have long dreamt of owning a home in the city.
This improvement is not limited to Mumbai alone. The Knight Frank report highlights that home affordability increased in all eight top metro cities in 2025.
One major reason: The Reserve Bank of India has reduced the repo rate by 1.25% from February 2025 till now. These rate cuts have made home loans cheaper, reversing the costlier loan scenario witnessed after 2022 when rates began rising.
Among major metros, Ahmedabad remains the most affordable housing market with an index of 18% — meaning families there spend the least portion of their income on home purchases.
Here’s a quick look at affordability levels in key cities:
| City | Affordability Index (%) | Ranking |
|---|---|---|
| Ahmedabad | 18% | Most affordable |
| Pune | 22% | Joint 2nd |
| Kolkata | 22% | Joint 2nd |
| Chennai | 23% | 3rd |
| Bengaluru | 27% | 4th |
| Hyderabad | 30% | 5th |
| NCR | 28% | Slight decline |
Unlike other metros, the National Capital Region (NCR) saw a minor dip in affordability — from 27% to 28%.
This shift is linked to:
Higher launches in the premium housing segment
Increase in weighted average property prices
Rising demand from luxury buyers
Despite this slight slide, NCR’s affordability still remains under 50%, which reflects a largely stable environment.
Affordability hasn’t improved only because of cheaper loans. Household income levels have been rising faster than home prices — a positive trend in India’s property market.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, stated:
“Income levels are growing faster than property prices. Lower interest rates have led to improved affordability across more cities.”
This combination is helping balance the market and boosting consumer confidence.
Knight Frank expects the positive momentum to continue into 2026.
Key supporting factors include:
RBI’s estimate of 7.3% GDP growth
Stable and lower interest rates
Strong housing demand from new buyers
However, experts also predict slight price rises in affordable metro markets like Ahmedabad, Pune, and Kolkata due to growing demand.
India’s real estate market is entering a more buyer-friendly phase. Mumbai — once seen as out of reach for many — has now become the most affordable it has been since 2010. If the current economic environment continues, 2026 could shape up to be an excellent year for homebuyers looking to invest confidently in residential properties.
