Planning to buy a house? This is India's most affordable city in 2025

India Today

8 hours ago

There's something deeply personal about buying a home. It's not just about bricks and beams. It's where memories ae made and dreams quietly unfold with each passing year. But for many families, that dream often feels just out of reach.However, if you are planning to buy a home in India this year, Ahmedabad may be your best option. According to Knight Frank India's latest Affordability Index, the city is the most affordable in the country in 2025.The index, which tracks housing affordability across major Indian cities, shows that buyers in Ahmedabad spend only 18% of their average income on home loan EMIs. This is well below the 40% affordability limit, making Ahmedabad the most budget-friendly city for homebuyers.Pune comes next, with an affordability ratio of 22%, followed by Kolkata at 23%. These cities continue to offer better value to buyers when compared to other metros. The Affordability Index considers various factors such as property prices, average household income, and home loan rates to calculate what share of a household's income goes towards monthly instalments.LOWER INTEREST RATES HELP BUYERSThe report highlights that the Reserve Bank of India's decision to cut the repo rate by 100 basis points since February 2025 has played a key role in improving housing affordability across the country. Lower interest rates have reduced EMIs for home loans, making it easier for people to buy houses.In fact, the first half of 2025 has seen a steady improvement in affordability in most cities. One of the most notable changes was seen in Mumbai. Known for its high property prices, Mumbai has always been the least affordable housing market in India. But for the first time since the index was introduced, Mumbai's affordability ratio dropped below the 50% mark, to 48%. While this is still higher than other cities, it marks the city's most affordable period in recent years.NCR SEES A SMALL DROP IN AFFORDABILITYIn contrast, the National Capital Region (NCR) saw a slight decline in affordability. The index shows that buyers now spend 28% of their income on housing, up from earlier figures. This is mainly due to rising residential prices, which have partly offset the benefit of lower interest rates.According to Shishir Baijal, Chairman and Managing Director of Knight Frank India, 'Affordability plays a critical role in maintaining homebuyer demand and sustaining sales momentum.' He explained that growing incomes and stable economic conditions help people feel more confident about making long-term financial commitments like buying a house.He also pointed out that the RBI's estimated GDP growth of 6.5% for FY 2026, along with a supportive interest rate environment, is likely to keep affordability at healthy levels through the rest of 2025.MACROECONOMIC CONDITIONS SUPPORT BUYINGThe RBI's recent measures, including a neutral stance on policy rates and a cut in the Cash Reserve Ratio (CRR), have helped improve liquidity in the banking system. This has made it easier for banks to lend, reducing borrowing costs for both homebuyers and developers.Along with this, the overall economic environment is improving. Inflation has stayed under control, salaries are growing steadily, and the economy is on track. These factors have led to better affordability, encouraging more people to consider home ownership.The report also notes that current affordability levels are some of the best seen since the post-pandemic period. This, along with lower interest rates and stable income growth, is helping drive a steady recovery in the housing market.For anyone planning to buy a home in 2025, cities like Ahmedabad, Pune and Kolkata offer the most attractive conditions right now.- Ends
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