
Bengaluru Vs Hyderabad: Where is real estate and pricing high?
According to Knight Frank India’s Affordability Index 2024, Hyderabad has emerged as the second most expensive housing market in India overtaking Bengaluru. The report highlights that Hyderabad’s affordability ratio has been consistent at 30% for the past three years. This means that an average household in Hyderabad spends 30% of its income on home loan EMIs. Hyderabad ranks just below Mumbai, which remains the least affordable housing market with a 50% EMI-to-income ratio.
Ahmedabad tops the list as the most affordable city with an affordability ratio of 20%, followed by Pune, Kolkata, Bengaluru and NCR at 27% while Chennai’s ratio is at 25%. The report attributes this stability in affordability to rising incomes and steady interest rates which have balanced out increasing property prices.
Housing affordability in India saw significant improvement between 2010 and 2021, thanks to reduced interest rates and consistent economic growth. The pandemic further boosted affordability as the Reserve Bank of India (RBI) slashed the policy repo rate to record lows, benefiting cities like Hyderabad, Chennai and Mumbai.
However, from May 2022 to February 2023, the RBI raised the repo rate by 250 basis points to counter inflation temporarily affecting affordability. Since February 2023, the repo rate has remained stable and increasing household incomes have helped sustain housing affordability despite rising property costs.
While Hyderabad’s housing affordability ratio has remained unchanged since 2022, Mumbai has improved its ratio from 67% in 2019 to 50% in 2024. Bengaluru on the other hand recorded a slight drop in affordability, with households spending 27% of their income on housing in 2024 compared to 26% the previous year. Despite this Bengaluru remains within the affordable range defined as an EMI-to-income ratio below 50%.