Buying a home in Mumbai has become easier: Survey

City is one of the second most affordable in the world

Mumbai has seen maximum improvement in affordability from 2010 and buying a home has now become easier, claims a recent survey by Knight Frank India, an independent global property consultancy service.

The study gives credit to the Benami Transactions (Prohibition) Amendment Act, 2016, demonetisation of high-value currencies, implementation of the Real Estate (Regulation and Development) Act (RERA), 2016, the credit-linked subsidy scheme and the Pradhan Mantri Awas Yojana for improving the rank of Mumbai in the affordable index.

The report claims, a house in Mumbai now costs approximately seven times the annual household income, as opposed to 11 times the amount in 2010. Affordability indices for Delhi and Hyderabad too have improved, with houses now costing five times the annual household income, as against six times the amount in 2010. The report has evaluated the top eight markets of India to assess home affordability, which include Delhi, Bengaluru, and Hyderabad. In its global report, Urban Futures, Mumbai has emerged as one of the second most affordable cities amongst its global peers. Urban Futures evaluated 32 cities across the world to understand the difference between home prices and income.

The affordability index examines the house price with the annual income of a household in a city. Ideal affordability is when house price is 4.5 times the average annual household income in a city. Except for Mumbai which has an index of seven, Delhi and Hyderabad five, in all other markets, indices fail to meet the 4.5 affordability benchmark.

In addition to reducing prices, the report also reveals there has been a decline in the average size of residential units, which has contributed to the growing affordability in the market. Home sizes have reduced by 24 per cent in Mumbai and Pune since 2010. Similarly, in Bengaluru, there has been an 18 per cent reduction in the average size of homes from 2010. Hyderabad and Ahmedabad are the only two cities that offer larger homes.

Shishir Baijal, chairman and managing director, Knight Frank India, said, “Housing is one of the most persistent challenges faced by urban centres across the globe today. India, which is also faced with these challenges, however, is witnessing a gradual improvement in the area. A decline in average ticket size and focus on affordable housing have improved home affordability across the country to a large extent. The fact that affordability statistics have moved dramatically since 2010 explains why sales have finally improved in 2018.”

The study gives credit to the Benami Transactions (Prohibition) Amendment Act, 2016, demonetisation of high-value currencies, implementation of the Real Estate Regulation and Development Act, 2016, the creditlinked subsidy scheme and the Pradhan Mantri Awas Yojana for improving the rank of Mumbai in the affordable index