Mumbai, known for its bustling streets, diverse culture, and economic vibrancy, has earned a distinction as the most expensive city to live in, as per the recently released Knight Frank Affordability Index for 2023. Ahemdabad is ranked as India's most affordable city to live in.
The issue of housing affordability has taken centre stage as cities strike a balance between economic growth and the well-being of their inhabitants.
The demand for a skilled workforce to power economic engines often clashes with the inadequate supply of quality housing, leading to a surge in property prices that far outpaces income growth.
The government's focus on affordable housing, exemplified by the flagship "Housing for All by 2022" program, has played a pivotal role in reducing residential unit prices and increasing affordability.
To better comprehend the global affordability crisis, Knight Frank has pioneered the Global Affordability Monitor, evaluating 32 cities worldwide based on three critical parameters.
Mumbai finds itself positioned in the second-most affordable bracket among these cities, which ironically places it as the least affordable city in India.
The Knight Frank India Affordability Benchmark further corroborates Mumbai's dire situation. With average house prices standing at around seven times the average household income, the financial burden of homeownership in Mumbai is the heaviest across all major Indian cities.
India, boasting one of the world's fastest-growing economies, has witnessed remarkable urban expansion driven by employment and business prospects.
This growth has attracted a wave of individuals seeking upward mobility and a better quality of life. Acquiring a home symbolizes stability, achievement and social status, making residential real estate a prized possession.
This fervour for property ownership has driven prices skyward. However, in the early 2010s, the market dynamics shifted. Spiralling prices coupled with larger apartment sizes led to demand contraction, leaving developers with unsold inventory.
Regulatory reforms, such as the Real Estate (Regulation and Development) Act 2016 (Real Estate Regulatory Authority) RERA and the government's affordable housing initiatives, played a pivotal role in revitalizing the market.
Measures like the Credit Linked Subsidy Scheme (CLSS) and infrastructure status for affordable housing projects have contributed to this shift.
The spectrum of affordability in India's top eight cities is intriguing, particularly when viewed from 2010 to 2018. While the average apartment in Mumbai now costs seven times the average household income, it's a notable improvement from 11 times in 2010.
Other cities such as Kolkata, Ahmedabad and Pune stand out as exemplars of improved affordability, with apartment prices at just three times the average household income.
The Knight Frank Affordability Benchmark, set at 4.5 times the average annual household income, remains a goal for cities like Mumbai, NCR and Hyderabad.
As the global housing landscape shifts toward affordability, the Indian residential market is undergoing a transformation, aligning with this global trend.
With regulatory interventions and a renewed focus on affordable housing, Indian cities are on a trajectory towards a more equitable housing landscape, one where residents can achieve the dream of owning a home without shouldering an exorbitant financial burden.