In the bustling city of Mumbai, a significant trend in housing affordability is emerging across India, particularly in Ahmedabad and Hyderabad. Recent studies reveal that housing sales in major cities are witnessing robust demand, supported by factors such as favorable interest rates and increasing incomes. Over the past decade and a half, the housing affordability landscape in Tier I cities has seen notable improvements, thanks to a combination of rising incomes, moderate price growth, and enhanced access to credit. According to a report by Colliers India, the Price-to-Income (P/I) ratio has seen a remarkable reduction from 88.5 in 2010 to 45.3 by 2025.
Ahmedabad stands out as a prime example of affordability, with its P/I ratio decreasing from 43.6 in 2010 to an impressive 19.8 in 2025. Similarly, Hyderabad's P/I ratio improved from 25.6 to 16.3 during the same period, showcasing the city's potential for affordable housing. Other cities like Bengaluru and the Delhi-NCR region have also made strides, with their P/I ratios improving from 44.2 to 20.9 and 63.8 to 27.8, respectively. This trend highlights a consistent pattern of strong income growth, which has played a crucial role in mitigating the effects of rising housing prices, thus maintaining a favorable affordability index.
The data pertaining to average housing prices is derived from the composite carpet prices across 50 cities in India, calculated for a 1,000 sq ft unit. The average income metrics are based on the per-capita disposable income per annum. Despite ongoing pressures from rising raw material costs, income growth has consistently outpaced property price increases in most urban markets. Since 2010, average incomes across India have more than quadrupled, with a compounded annual growth rate (CAGR) of around 10%, compared to the 5-7% growth in housing prices. This dynamic has significantly enhanced housing affordability in Tier I cities over the past 15 years, driven by increasing income levels, moderate property price growth, and improved credit access.
Furthermore, the report emphasizes that the regulatory reforms and conducive policies introduced over recent years have played a pivotal role in shaping the real estate landscape. As a result, the Price-to-Income (P/I) ratio has dramatically improved, signaling a substantial rise in housing affordability in major Indian markets. This shift marks a positive outlook for potential homeowners and investors alike, as cities like Ahmedabad and Hyderabad continue to offer viable options in the competitive real estate sector.