Table of Content
- Affordability Trends Strengthen Across Tier-I Cities
- Ahmedabad and Hyderabad: The Leaders in Affordability
- Other Tier-I Cities Also Register Improvement
- How Affordability Is Calculated
- Income Growth Outpacing Housing Prices
- Monetary Policy and Reforms Reinforce Affordability
- Banking Sector Confidence Reaches 15-Year High
- Infrastructure Expansion Fuelling Demand
- Price Arbitrage Still Prominent in Some Cities
- Expert Perspective
- Conclusion
Housing sales across major Indian cities continue to show remarkable strength, supported by stable demand, healthier income levels, and a favourable lending environment. Over the past 15 years, affordability has steadily improved across most Tier-I cities, thanks to rising incomes, moderate price appreciation, and easier access to credit. According to the latest Colliers India report, the Price-to-Income (P/I) ratio across top markets has improved significantly from 88.5 in 2010 to 45.3 in 2025.
Among all major metros, Ahmedabad and Hyderabad have now emerged as India’s most affordable housing markets, leading the shift towards more accessible homeownership.
Affordability Trends Strengthen Across Tier-I Cities
The P/I ratio, a key benchmark for understanding housing affordability has seen substantial improvement across the country. This ratio compares the cost of buying a home with the average annual income of residents. A lower P/I ratio indicates better affordability and a healthier housing ecosystem.
Driven by rising disposable incomes, stable economic conditions, and strengthening credit availability, housing affordability has nearly doubled in the past decade and a half. The national P/I ratio dropping from 88.5 to 45.3 highlights how incomes have risen faster than home prices, pushing more cities into India’s most affordable housing markets.
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Ahmedabad and Hyderabad: The Leaders in Affordability
Among all Tier-I markets, Ahmedabad and Hyderabad have shown the most significant affordability gains:
- Ahmedabad: P/I ratio improved from 43.6 (2010) to 19.8 (2025)
- Hyderabad: P/I ratio improved from 25.6 (2010) to just 16.3 (2025)
These numbers highlight how both cities are now firmly positioned as India’s most affordable housing markets, offering a healthy balance between price growth, job opportunities, and infrastructure expansion. The decentralised development model in both metros, supported by robust road networks, new industrial clusters, and an expanding IT corridor, has also helped maintain affordability even as demand rises.
Other Tier-I Cities Also Register Improvement
While Ahmedabad and Hyderabad lead the charts, cities like Bengaluru and Delhi-NCR have also witnessed meaningful improvements in affordability:
- Bengaluru: P/I ratio improved from 44.2 to 20.9
- Delhi-NCR: P/I ratio improved from 63.8 to 27.8
This shift has largely been driven by sustained income growth that has offset the impact of rising prices. The increased availability of home loans and rising household earnings have helped these metros stay competitive within India’s most affordable housing markets landscape.
How Affordability Is Calculated
The Colliers report evaluates affordability using a transparent and uniform approach:
- A standard 1,000 sq ft residential unit
- Composite carpet pricing across 50 Indian cities
- Average per-capita disposable income
This provides a reliable view of how home prices compare against actual income levels across regions.
Income Growth Outpacing Housing Prices
One of the strongest contributors to improved affordability is the fact that average incomes in India have grown at nearly 10% CAGR since 2010 more than four times the growth seen in earlier decades. Housing prices, meanwhile, have risen at a relatively modest 5–7%.
This widening gap between income and property price growth has pushed multiple cities into India’s most affordable housing markets, especially those where development has been well-distributed, such as Ahmedabad, Hyderabad, and Bengaluru.
Monetary Policy and Reforms Reinforce Affordability
Regulatory reforms and a supportive monetary environment have significantly boosted the residential real estate market. Following the pandemic, India witnessed historically low interest rates that encouraged homebuying across segments. Even after recent adjustments, the benchmark lending rate has stabilised at 5.5%, keeping EMIs manageable.
Alongside this, policies under RERA have brought transparency and confidence back into the buying process, strengthening demand across India’s most affordable housing markets.
Banking Sector Confidence Reaches 15-Year High
The lending sector’s increased confidence in housing demand reflects the market’s stability and growth potential. Over the past 15 years:
- Outstanding home loans increased from ₹3 lakh crore to over ₹30 lakh crore
- Housing loans as a share of total bank credit grew from 10% to nearly 17%
This surge indicates strong buyer momentum and sustained demand across both premium and affordable segments.
Infrastructure Expansion Fuelling Demand
Major infrastructure projects including expressways, new metro corridors, ring roads, and airport upgrades are expanding residential catchment areas. As workplaces decentralise away from traditional CBDs, homebuyers are increasingly choosing well-connected suburban and peripheral locations that offer better value.
Cities like Ahmedabad, Hyderabad, and Bengaluru are benefiting the most from this trend because of their balanced pricing and proactive urban planning, further strengthening their place among India’s most affordable housing markets.
Price Arbitrage Still Prominent in Some Cities
While fringe areas of Mumbai, Chennai, and NCR have seen rapid price escalation over the past decade due to major connectivity upgrades, the gap between central and peripheral locations remains large. Meanwhile, the price differential is far more balanced in cities like Ahmedabad, Bengaluru, and Hyderabad, creating a more accessible environment for first-time homebuyers and end-users.
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Expert Perspective
Industry experts note that although raw material prices continue to exert upward pressure on housing costs, income levels have grown faster than property values in most Indian cities. As per Colliers India’s leadership, the steady rise in incomes, coupled with expected moderation in interest rates and declining inflation, will continue to support affordability across major markets.
Conclusion
Ahmedabad and Hyderabad have emerged as clear leaders among India’s most affordable housing markets, supported by robust income growth, transparent regulations, and balanced urban expansion. With affordability at a multi-year high and residential demand showing sustained strength, these cities are well-positioned to attract both end-users and long-term investors.
Ans 1. Both cities have seen strong income growth, balanced price appreciation, and well-planned infrastructure expansion. Their P/I ratios 19.8 for Ahmedabad and 16.3 for Hyderabad—are the lowest among major metros, making homeownership far more achievable compared to other Tier-I cities.
Ans 2. The P/I ratio compares the cost of buying a standard home with the average annual income of residents. A lower P/I ratio signals stronger housing affordability and healthier market conditions, showing that incomes are growing faster than property prices.
Ans 3. Affordability has strengthened significantly as the national P/I ratio dropped from 88.5 in 2010 to 45.3 in 2025. Higher disposable incomes, improved credit access, and moderate housing price growth have collectively made homebuying easier across most Tier-I cities.
Ans 4. A mix of rising salaries, decentralised development, strong road and metro connectivity, growing IT and industrial hubs, and balanced pricing has helped these cities maintain affordability even as demand increases.
Ans 5. Low post-pandemic interest rates, followed by stable lending levels around 5.5%, have kept EMIs manageable. This has encouraged more homebuyers to enter the market and improved overall affordability across major Indian cities.
Ans 6. Average incomes in India have grown at nearly 10% annually since 2010, while housing prices have risen at a slower 5–7%. This income–price gap has made homeownership more accessible and strengthened markets like Ahmedabad, Hyderabad, and Bengaluru.
Ans 7. Expressways, metro corridors, airport upgrades, and ring roads are pushing residential demand into well-connected suburban zones. Cities with balanced pricing and planned expansion—especially Ahmedabad and Hyderabad are benefiting the most.
Ans 8. Yes. Bengaluru and Delhi-NCR have seen notable improvements in their P/I ratios due to steady income growth and increased access to home loans, even though they remain relatively costlier than Ahmedabad and Hyderabad.