A Comprehensive Perspective on Housing Affordability in Major Indian Cities
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Housing affordability is becoming a big concern in cities across India, with property prices rising faster than people’s incomes. According to the latest Affordability Report by Magicbricks – Housing Affordability in Major Indian Cities (2024), two important factors help us understand how affordable homes really are—the Price to Income (P/I) ratio and the EMI to Income (EMI/I) ratio. In this blog, we’ll break down these factors, see how they affect housing affordability in major cities, and look at the trends that are shaping the market today.
Recognizing Important Affordability Metrics
Price to Income (P/I) Ratio
The Price to Income (P/I) ratio shows how the price of a property compares to the average annual income of a household. It tells us how many years’ worth of income would be needed to buy a home without taking out a loan.
If the P/I ratio is above 5, it usually points to an affordability problem, meaning that the cost of owning a home becomes too high compared to what people earn. In cities with a high P/I ratio, buyers may find it difficult to afford a home without relying heavily on loans.
EMI to Income (EMI/I) Ratio
The EMI to Income ratio reflects the percentage of a household’s monthly income that goes towards repaying home loan EMIs (Equated Monthly Installments). Technically, this ratio should stay below 40-50% to ensure that the borrower can comfortably meet other living expenses. A higher EMI/I ratio may signal overburdened borrowers, making housing financially unfeasible for many.
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