NEW DELHI: A report by Knight Frank India reveals that housing affordability remained stable across most major residential markets in H1 2026, bolstered by lower borrowing costs.
Among the eight cities analyzed, six stayed within the affordability threshold, while the Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) surpassed the 50% benchmark.
Ahmedabad emerged as the most affordable housing market among the top cities with an affordability ratio of 23%, followed by Kolkata at 25% and Pune at 28%.
Bengaluru and NCR saw a slight decline in affordability compared to 2025, recording ratios of 35% and 65%, respectively. The remaining markets exhibited stable conditions, according to the report.
The report evaluates the percentage of household income needed for equated monthly installments (EMIs) on housing units. A ratio above 50% signifies unaffordability.
It noted that homebuyer affordability has benefited from a total of 125 basis points of monetary easing. Continued lower borrowing costs are anticipated to bolster housing demand through H2 2026.
Between 2016 and 2021, affordability improved across major cities due to lower interest rates. However, in 2022, it worsened after the Reserve Bank of India raised the repo rate by 250 basis points over nine months, starting in May 2022.
Stability in rates from early 2023 helped maintain affordability levels, although rising property prices have kept them high in certain markets, particularly in NCR.
Recently, the RBI’s cumulative rate cuts have improved home loan affordability, enabling residential sales to stay near the post-pandemic peak recorded in 2024, according to the report.
The Monetary Policy Committee kept the policy repo rate at 5.25% during its February and June 2026 meetings, citing risks associated with energy prices stemming from the West Asia conflict and uncertainties regarding monsoon conditions.
“Housing affordability remains a crucial factor influencing residential demand. The benefits of reduced interest rates continue to assist homebuyers across most markets, maintaining sales near post-pandemic highs,” remarked Shishir Baijal, chairman and managing director of the firm.
He added that gains in affordability have been moderated primarily due to escalating property prices, while employment stability and favorable financing conditions continue to underpin demand.
