Housing Affordability Index India 2026: Which Are the Most Affordable Cities?

Ahmedabad is India’s most affordable big housing market in Knight Frank’s H1 2026 Affordability Index. Home loan EMIs take 23% of an average household’s income there. At the other end, only the Mumbai Metropolitan Region (69%) and the National Capital Region (67%) are above the 50% line Knight Frank treats as unaffordable.

The ranking asks a better question than “where are prices lowest?” It asks where an average income can carry a home loan. Below is the full ranking, an explanation of how the index works, and the factors influencing housing affordability across major Indian cities.

What Is the Housing Affordability Index and How Is It Calculated?

The Housing Affordability Index measures the share of an average household’s income needed to pay the EMI on an average home in a city. Knight Frank’s note says a 40% level means households spend 40% of their income on the home loan EMI.

Knight Frank defines housing as affordable when a household spends 50% or less of its income on EMIs. Beyond that, banks rarely underwrite a mortgage. For H1 2026, all variables are held constant except the interest rate and property price.

A simple example: a household earning ₹1 lakh a month with a ₹35,000 EMI has an affordability ratio of 35%. You can estimate your own monthly repayment using the AquireAcres home loan EMI calculator.

Housing Affordability Index India 2026: City-Wise Ranking

Compared with the previous year, Bengaluru slipped from 34% to 35% and NCR from 66% to 67%, while the other cities were largely unchanged. Six of the eight cities are within the 50% threshold.

Ahmedabad leads the ranking, followed by Kolkata and Pune. The results also reflect differences in property prices and household incomes across these markets. Read more about India’s affordable housing leaders, including Ahmedabad, Pune and Kolkata.

Why Are Mumbai and Delhi NCR the Least Affordable Cities?

The index shows a clear affordability gap between Mumbai, NCR and the other major cities. Two factors that influence this difference are property prices and the type of housing entering the market.

When new launches are concentrated in the premium segment, the average property price can rise. This can make home ownership more difficult for households whose incomes have not increased at the same pace.

The affordability figures for MMR and NCR are substantially higher than those for Ahmedabad, Kolkata, Pune and Chennai. This indicates the greater income burden faced by households looking to purchase homes in these markets.

Can You Compare the 2026 Affordability Index With Earlier Years?

Not directly. The H1 2026 series notes that it reflects an updated index level with a revised methodology on residential prices.

Knight Frank’s December 2025 report had put Mumbai at 47%, NCR at 28%, Bengaluru at 27% and Ahmedabad at 18%, against 69%, 67%, 35% and 23%, respectively, in the H1 2026 figures.

This difference should not be interpreted as a sudden year-on-year deterioration in affordability. The methodology has changed, affecting how the figures are calculated. In the revised series, NCR already stood at 66% in both 2024 and 2025.

When comparing affordability across years, it is important to check whether the reports use the same methodology. Comparing figures from different series without accounting for these changes can give a misleading picture.

Are Lower Home Loan Rates Making Homes More Affordable in 2026?

Lower home loan interest rates can reduce monthly repayments and improve affordability for prospective buyers. Knight Frank said affordability remained broadly supportive in H1 2026, aided by 125 basis points of cumulative monetary easing.

However, lower interest rates do not necessarily offset rising property prices in every market. This is reflected in the slight increase in the affordability ratios for Bengaluru and NCR.

The impact of interest-rate changes also varies across cities depending on property prices, household incomes and the size of the loan required. Read how interest rate cuts have affected housing affordability in Mumbai and NCR.

What Is Pushing Property Prices Up in 2026?

The type of homes being launched in the market is one factor influencing overall housing costs.

In Q2 2026, homes priced above ₹1.5 crore accounted for about 48% of new launches, while the affordable segment below ₹40 lakh accounted for 6%. Q3 brought some relief, with the affordable share of supply more than doubling to 14%.

New launches rose 18% year on year to about 1,14,320 units. Sales of homes below ₹50 lakh fell about 32% in H1 2026, according to the figures cited in the source material.

The growing share of premium housing can affect the average property price in a city. This matters for affordability because the index considers the relationship between household income, property prices and home loan repayments.

How to Check Your Own Home Loan Affordability

Homebuyers can calculate their EMI-to-income ratio to understand how much of their monthly income would go towards repaying a home loan.

Divide the monthly EMI by the monthly household income and multiply the result by 100.

For example, if a household earns ₹1 lakh per month and pays an EMI of ₹35,000, the ratio is 35%.

Compare the result with the 50% affordability threshold, while also considering other loan repayments and regular household expenses. A city-level average is only a broad indicator. Individual affordability depends on income, savings, loan amount, interest rate and repayment tenure.

You can use the AquireAcres home loan EMI calculator to estimate repayments for a possible loan amount and tenure.

This is general information, not financial advice. Homebuyers should check their eligibility and repayment capacity with a lender before taking a loan.

What the Housing Affordability Index Does Not Tell You

The index covers eight cities, so smaller cities are not included in the ranking. It is also based on average household incomes and average home prices. A particular locality or housing project can have prices that differ significantly from the city average.

The index is one indicator of housing affordability, not a complete measure of whether a property is suitable for an individual buyer.

People comparing two cities should use the ranking as a starting point and then examine local property prices, household income, loan eligibility and other ownership costs.