Mumbai: Home affordability levels are likely to slip further through the end of 2022 and thereafter in 2023 as well, primarily due to the rising home loan interest rates and inflationary trends.
JLL India's report released on Monday states that even though affordability is likely to be impacted, the momentum inhibitor looks to be a temporary one with India's focus on economic growth and likely easing of inflationary pressures expected to reverse the current interest rate growth. “While affordability is decidedly weakening, we are still some way off the worst affordability periods for all cities and unlikely to see a repeat of those levels,” the report states.
Which are the most affordable cities
According to the Home Purchase Affordability Index (HPAI) report, Mumbai's affordability in 2022 and beyond breaches the affordability threshold in 2021. Mumbai has been the fastest-moving city in terms of its HPAI score improvement and became an affordable market with its threshold hitting 100. “It is likely to slip below the threshold value of an affordable market but only slightly given all the macroeconomic headwinds but still remain much above its HPAI low of 43 in 2013,” reads the HPAI report.
Kolkata, Hyderabad and Pune will continue to remain the most affordable cities in the next few monthswith Kolkata still on track to remain the most affordable residential market in India among the top seven cities. However, Kolkata, Hyderabad and Pune will show progressively lower affordability levels compared to 2021 for both 2022 estimates and 2023 forecast values.
“What remains pertinent is that we are coming off an 18-month period of a robust recovery in residential demand even as prices and interest rates have moved up during the latter part of this time frame. Andaffordability despite the estimates of a decline will still remain quite attractive and second best only to 2021. We are now entering the territory of a rising interest rate cycle, driven by global macroeconomic headwinds,” managing director and head of residential services at JLL India, Mr Siva Krishnan said. He added that the residential market stakeholders and policymakers need to remain in sync and agile to ensure that the sector continues to remain in the pink of health.
The next meeting of the Reserve Bank of India's (RBI) Monetary Policy Committee began on Monday and is scheduled to go on till Wednesday when the RBI governor will make public the decisions taken.
