Kolkata: While the Reserve Bank of India repo rates surged pushing home loan rates, the capital of Bengal, Kolkata still ranks amidst the most affordable cities. Pertaining to the Equated Monthly Installment (EMI)-income ratio, currently, home buyers in Kolkata need to spend 27 per cent of family income on home loan. Last year, Kolkata was at a tie with Chennai matching an affordability index of 25 per cent. Despite the increase of 90 basis points in repo rate (rate at which commercial banks are lent money by central bank of India) by RBI, Ahmedabad, Chennai and Pune are still more affordable.Also Read – RBI Governor Shaktikanta Das Calls Cryptocurrency ‘Clear Danger’; What Do Experts Say? Know Here
Speaking of affordability index, generally, all banks do not prefer to agree to EMIs that exceed 50 per cent of the total family income. In the wake of the increasing repo rates, the affordability index has observed a dip. Also Read – Why RBI Governor Calls Cryptocurrencies ‘Clear Danger’? Read HERE
Reason Behind Low Cost of Living in Kolkata
Recently, in Kolkata there has been a rise in construction input costs. Due to this, developers in the city have hiked prices by at least 10 per cent. Hence, the city witnesses an increase in prices nonetheless, remains one of the most affordable cities. Also Read – 100 Per Cent Privatisation Of Public Sector Banks Soon? Know Here
Speaking to Time of India, Shishir Baijal, Chairman and Managing Director of property consultancy firm Knight Frank India, said, “On an average, affordability has decreased by 200-300 basis points across major markets.”
According to Shishir Baijal, Knight Frank, despite the hike in the rates, markets remain largely affordable. (Image Credits: Pixabay)
He also elaborated on how there has been a bit of a roller coaster ride for Kolkata in terms of affordability index EMI to income ratio of an average household – it was 45 per cent in 2010, dipped to 31 per cent in 2019. Then further improved to 30 per cent in 2020 due to COVID-19 pandemic and again came to 25 per cent in 2021.
Barring the interest rates, all other variables are kept constant when calculating the income and the affordability.
Mumbai, Hyderabad Most Expensive Cities
Mumbai still stands with the title of being the most expensive city with 56 per cent affordability index. Looking at the graph for this city’s residential market, in 2010 the home purchase affordability index for Mumbai stood at 93 per cent that further improved to 66 per cent in 2019. With the onset of pandemic, it again improved to 66 per cent in 2020 and 53 per cent in2021.
Following suit is the city of Nizam, Hyderabad with 31 per cent. For Hyderabad also, there has been an improvement from what was at 47 per cent in 2010 to 33 per cent in 2019 and finally 31 per cent now. Hence, this pear city is the second most expensive place to live in India.
Th national capital, Delhi, is not far behind and is at the third position with 30 per cent. It saw a drastic improvement from 53 per cent in 2010 to 34 per cent in 2019. The Silicon Valley of India, Bengaluru is only a slight margin behind and is placed at fourth position with 29 per cent in the affordability index.
While these are some of the most expensive cities, Ahmedabad is the most affordable, maintaining its consistency, one with 22 per cent.
Source: https://www.india.com/business/kolkata-ranks-amongst-most-affordable-cities-in-india-check-out-other-cities-in-the-list-5487903/
