Housing Affordability Remains Stable Across Most Major Indian Cities in H1 2026

Housing affordability remained largely stable across India's leading residential markets during the first half of 2026, thanks to lower home loan interest rates and improved financing conditions. Recent market data shows that six out of the country's eight major cities continued to stay within the generally accepted affordability limit, making residential property accessible for a large section of buyers.

The affordability index measures the percentage of a household's monthly income required to pay home loan EMIs for a residential property. A ratio below 50% is generally considered affordable, while anything above this level indicates that buying a property may place significant financial pressure on a household.

Among the major cities, Ahmedabad emerged as the most affordable residential market with an affordability ratio of 23%. It was followed by Kolkata at 25% and Pune at 28%, highlighting their relatively comfortable housing costs for buyers.

Meanwhile, Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) continued to remain above the affordability benchmark. NCR recorded the highest affordability ratio at 65%, while MMR also remained above the recommended threshold. Bengaluru and NCR experienced a slight decline in affordability compared to 2025 due to rising residential property prices, although most other cities witnessed little or no significant change.

One of the biggest reasons behind stable affordability has been the reduction in borrowing costs. Over the past several months, cumulative monetary easing of 125 basis points has helped reduce home loan interest rates, making monthly EMIs more manageable for buyers. This improvement is expected to continue supporting residential demand during the second half of 2026.

Housing affordability has experienced different phases over the past decade. Between 2016 and 2021, lower interest rates significantly improved affordability across most major cities. However, conditions became more challenging in 2022 after the Reserve Bank of India increased the repo rate by 250 basis points over a nine-month period, resulting in higher home loan interest rates and increased EMIs.

From early 2023 onwards, interest rate stability helped the market regain balance. Even though residential property prices continued to rise in several cities, affordability remained relatively steady because borrowing costs stopped increasing. Markets such as NCR continued to face affordability challenges due to stronger property price growth.

More recently, lower lending rates have once again improved home loan affordability, helping residential property sales remain close to the strong post-pandemic levels seen in 2024. Stable employment, steady household incomes, and easier financing options have also contributed to maintaining buyer confidence across several housing markets.

The Reserve Bank of India's Monetary Policy Committee kept the policy repo rate unchanged at 5.25% during its February and June 2026 meetings. The decision reflected concerns over global energy prices, geopolitical developments in West Asia, and uncertainty surrounding monsoon conditions, while maintaining support for overall economic stability.

Although rising property prices have reduced some of the gains achieved through lower interest rates, housing affordability remains an important factor supporting residential demand across India. If borrowing costs remain favourable and economic conditions stay stable, the housing market is expected to continue attracting buyers in the coming months.

By LNN (Liyaans News Network)