Mumbai’s real estate market, known for its high costs, is now more affordable. Gulam Zia from Knight Frank India shared this insight. He noted that Mumbai’s affordability index dropped below 50 for the first time. This shows a major improvement. Lower interest rates helped affordability in early 2025.
This positive trend isn’t the same everywhere. Ahmedabad, Pune, and Kolkata are the most affordable cities. However, the National Capital Region (NCR) is different. Zia said NCR is the only area where affordability decreased. Its index rose from 25-26 to 28. Kolkata and Hyderabad remain very affordable. Property prices rose in Hyderabad, though.
Sales are strong in the Indian housing market. Sales have grown faster than new home construction. This has reduced unsold homes in most cities. Bengaluru and NCR are exceptions. Their price increases have been substantial.
Lower home loan interest rates are key to better affordability. Reduced rates mean smaller monthly payments. Zia mentioned that a 1% rate cut by the RBI had a big effect. Mumbai’s home loan rates fell by 2% recently. This makes homes easier to buy.
Demand for housing is good. However, supply is a problem for affordable homes. Developers focus on mid-to-high priced homes. The lowest price segment lacks new options. Zia stated that few big developers serve this market. This is a major issue.
This supply shortage is risky. Government programs and lower rates have boosted interest. But if supply doesn’t meet demand in the affordable segment, prices could rise sharply. Zia warned this is a big risk. It could hinder recovery for many buyers.