Kolkata is the most affordable residential real estate market as it overtakes Hyderabad, according to the Home Purchase Affordability Index by property consultant JLL.
The report shows that from 2011 to 2020, home purchase affordability improved across key Indian cities which were part of the Index.
This was despite a bigger fall in annual household income as compared to residential property prices.
A sharp decrease in the cost of funding (average home loan rates reduced from ~8.9% in 2019 to 7.5% in 2020), more than offset the adverse impact of lower incomes on affordability, the report added.
“We believe that the initial signs of revival were visible in the residential market in the third quarter of 2020, with sales of residential units witnessing an uptick. Furthermore, our analysis suggests that despite a fall in household income in 2020, home purchase affordability has increased in 2020 across all the markets under consideration,” said Ramesh Nair, CEO and Country Head, JLL India.
Until 2019, the affordability index has indicated that Hyderabad was the most affordable residential market.
Mumbai continued to be the only market below the affordability threshold of 100. However, the report points out that Mumbai is the fastest moving city, showing a significant improvement on JLL HPAI from 47 in 2011 to 95 in 2020.
“The future of the residential market and the sustenance of the recovery process depends on the containment of the virus. 2021 can pan out in two different ways. If the virus is contained by Q1 2021 and economic activity resumes at full capacity, affordability is expected to improve across all the cities under consideration,” said Samantak Das, Chief Economist and Head of Research & REIS India, JLL.
Das said that if the virus outbreak is not contained in the first quarter of 2021 and economic activity remains subdued, affordability levels are likely to remain at similar levels in most cities.
The report takes in consideration whether a household earning an average annual income (at an overall city level) is eligible for a housing loan to buy a 1,000 sq ft residential property in the city, at the prevailing market price and home loan interest rate.
It analyses the interplay between three factors - property prices, income and home loan rates to determine the current and the emerging trends in the home purchase ability of urban households.
The index covers the top seven markets in India - Mumbai, Delhi NCR, Bengaluru, Chennai, Pune, Hyderabad and Kolkata.
Source: https://economictimes.indiatimes.com/industry/services/property-/-cstruction/kolkata-overtakes-hyderabad-to-become-the-most-affordable-residential-real-estate-market-report/articleshow/78913700.cms?
Comments