For the first time in a long time, Mumbai is seeing its average real income growing faster than property prices. As per a recent Knight Frank report, India’s financial capital has recorded a rise of 20.4 percent in annual household incomes in contrast to the growth in housing prices that has been estimated at eight percent only.
Knight Frank’s Global Affordability Monitor analyses affordability across 32 cities. It takes into consideration three key measures – house price-to-income ratio, rent as a proportion of income and real house price growth compared to real income growth.
While San Francisco saw the highest rise in annual income at 25 percent in the five-year period, it is Amsterdam that recorded the highest rise in housing prices between 2014-18 at 63.6 percent. Least affordable cities turned out to be Auckland, Hong Kong, San Francisco, and Vancouver while ‘most affordable’ ones are found to be Dubai, Kuala Lumpur and Sao Paulo.
Here are the key highlights of the Global Affordability Monitor 2019 report in reference to Mumbai:
- Despite being India’s most expensive real estate market, Mumbai emerged as one of the more affordable cities among global peers.
- Mumbai’s real household income growth outpace real house price growth by 12.4 percent, indicating an improvement in affordability.
- Affordability in Mumbai has improved on account of the reduced size of units with largely stable prices. The consistent reduction in apartment sizes has also lowered the average ticket price for Mumbai.
- It is estimated that on average, newly launched homes are 25 percent smaller between 2014 and 2018. Maximum launches, especially in the last two years (2017 and 2018), have been in the affordable and mid-range segment with ticket prices below Rs 75 lakh.