KOLKATA: The City of Joy is not only the second-most affordable metropolis to be in if one wants to buy residential property, it is also the city that took the least hit among all big cities on the affordability index in the past one year, according to a study conducted by a firm that has interests in real estate valuations.
The Knight Frank affordability index – which tracks the EMI-to-household income ratio, a measure of how easy it is to manage total household budgets while buying a house – places Kolkata second in the list of India’s most affordable city to own a house, on a par with Pune and second only to Ahmedabad.
In Kolkata and Pune, the average home-buyer spends just a quarter (25%) of their family income on home loans. It is well below the threshold of ‘comfortable affordability’, set at 50%. The corresponding figure for Ahmedabad is 22%. Unsurprisingly, Mumbai is the most expensive on the list, at 51% – which means a home-buyer, on an average, has to spend more than half of their family income on EMIs.
Also, home-buyers in Kolkata took the least hit in the past year, during which home loan interest rates increased by 40%, resulting in higher EMIs. In 2021, the city’s affordability index was 24.8%, which rose marginally this year to 25.1%. But in the other seven major cities, the affordability index has worsened in the range of 1% and 3%.
Affordability of homes in 2022 has significantly improved since 2019, prior to the pandemic, when as much as 32% of household incomes were being spent on EMIs in Kolkata.
Historically, homes have been more affordable in Kolkata than in Mumbai or Delhi. Chennai, Bengaluru and Hyderabad, which used to be on a par with Kolkata, have become dearer in the last 20 years.
Highest home sales in a calendar year
Kolkata: Even as the introduction of home loans made property ownership viable for millions, families in Kolkata used to spend nearly 53% of their income on EMIs around 2012-13. That burden has now reduced by more than half, both on account of higher incomes and lower home loan rates. Though home loan interest rates have firmed this year from 6.4% to 8.3%, Kolkata is still an affordable market. This year, over 21,000 homes were sold, the highest in a calendar year.
Yashwin Bangera, senior vice-president (research) at Knight Frank India, attributed the minor impact on affordability to the city’s overall economic environment and income growth.
The Knight Frank affordability index captures movement in key constituents like property prices, home loan interest rates and average household incomes to determine buyers’ ability to purchase a house. Banks underwrite home loans when the EMI-to-income ratio is under 50%. This is deemed to be the threshold for affordability by the affordability index.
Siddharth Pansari, president, Bengal chapter of Confederation of Real Estate Developers Association of India, said multiple factors worked in Kolkata’s favour. “While price of homes have always been more affordable here than homes in similar localities elsewhere, Kolkatans’ higher priority in buying homes is balanced with meeting conservative spends on EMI. This has also ensured stability in the market,” he said.
Source: https://news.google.com/__i/rss/rd/articles/CBMifGh0dHBzOi8vdGltZXNvZmluZGlhLmluZGlhdGltZXMuY29tL2NpdHkva29sa2F0YS9ob3VzZS10aGF0LWtvbGthdGEtMm5kLW9uLWhvbWUtYWZmb3JkYWJpbGl0eS1pbmRleC9hcnRpY2xlc2hvdy85NjYwOTIyMS5jbXPSAXdodHRwczovL20udGltZXNvZmluZGlhLmNvbS9jaXR5L2tvbGthdGEvaG91c2UtdGhhdC1rb2xrYXRhLTJuZC1vbi1ob21lLWFmZm9yZGFiaWxpdHktaW5kZXgvYW1wX2FydGljbGVzaG93Lzk2NjA5MjIxLmNtcw?oc=5
