Housing affordability across major Indian cities showed mixed movement in 2025, supported largely by interest rate cuts and improved lending conditions, according to a recent housing affordability report. Lower borrowing costs helped ease the financial burden on homebuyers in several markets, even as property prices remained firm in select regions.
The report highlighted that successive reductions in policy interest rates during the year translated into lower home loan EMIs. This improvement strengthened affordability levels across most of the top eight residential markets tracked in the study. The affordability assessment is based on the EMI-to-income ratio, a key indicator used to measure the share of household income required to service a home loan.
Mumbai, traditionally considered one of the least affordable housing markets in the country, recorded a notable improvement. For the first time, the city’s EMI-to-income ratio dropped below the 50 percent threshold, indicating better affordability conditions for homebuyers. This change was driven by a combination of reduced home loan interest rates, steady income growth, and relatively stable price appreciation compared to previous years. The improvement marks a significant shift for Mumbai’s residential market, which has historically faced affordability challenges due to high property values.
In contrast, Delhi NCR witnessed a marginal dip in affordability during the same period. The slight decline was primarily attributed to an increase in residential property prices that offset some of the benefits of lower interest rates. Despite this moderation, affordability levels in Delhi NCR remain within manageable limits and continue to stay below the stress benchmark of 50 percent, suggesting that the market is still accessible for a large segment of buyers.
Other leading cities such as Ahmedabad, Pune, Bengaluru, Hyderabad, and Kolkata either maintained stable affordability or saw incremental improvements. Ahmedabad continued to rank as one of the most affordable major cities, supported by lower property prices and favorable income-to-EMI ratios. Pune and Kolkata also remained relatively affordable, benefiting from balanced price growth and stable borrowing costs.
Overall, the report indicates that interest rate cuts have played a crucial role in supporting housing affordability across urban India. While price movements continue to influence individual markets differently, the current lending environment has provided relief to homebuyers and is expected to support residential demand in the near term, provided macroeconomic conditions remain stable.
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