For millions of people dreaming of owning a home, 2025 proved to be a year full of hope. According to Knight Frank India’s new Affordability Index report, the reduction in home loan interest rates compared to the previous year has strengthened the purchasing power of ordinary people. Lower EMIs and stable incomes mean that buying a home is no longer as burdensome as it used to be.

Ahmedabad becomes the most affordable city

According to the report, Ahmedabad has emerged as the most affordable city for buying a home among the top 8 cities in the country. The affordability ratio here was recorded at only 18 percent, which means that an average family has to spend only a very small portion of their monthly income on home loan EMIs. This figure indicates that buying a home in Ahmedabad is relatively easy and secure for the middle class.

EMI burden in Mumbai falls below 50 percent for the first time

Even in an expensive real estate market like Mumbai, 2025 showed positive changes. According to the report, the EMI-to-income ratio in Mumbai has decreased to 47 percent. This is the first time in the city’s history that the cost of buying a home has fallen below the crucial 50 percent mark. This indicates that buying a home in Mumbai is now more sustainable and conducive to long-term planning than before.

Slight increase in prices in Delhi-NCR

While affordability has improved in many cities, the situation in the Delhi-NCR region appears slightly different. The report indicates a slight decline in home-buying affordability here, suggesting that property prices and EMI pressure have increased somewhat in this region.

What is the Affordability Index?

The Affordability Index is a measure that helps understand how much of their income an average family in a city has to spend on paying home loan EMIs. If a city’s index is 40 percent, it means that 40 percent of the family’s income goes towards EMIs. Generally, a level below 50 percent is considered safe, while anything above that indicates increasing economic pressure.

Real Estate Market Outlook in 2025

The report also states that at the beginning of 2025, there were concerns about market overheating and a potential decline in prices, but this has not materialized. Home sales remain close to the record levels of 2024, and the market is progressing at a steady pace. Current indicators suggest that the year could conclude without any major disruptions.