Knight Frank India’s Report Reveals Hyderabad as Second Most Expensive Real Estate Hub in India


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    Hyderabad’s real estate market has clinched the second position in terms of costliness across India, boasting an affordability ratio of 31%, as disclosed by Knight Frank India’s Affordability Index. This marks a modest 1% escalation during the initial half of the ongoing year, in comparison to the 30% documented in 2022.

    Mumbai takes the pole position with an affordability ratio of 55%, signifying an upswing from the preceding year’s 53%. Following suit, the National Capital Region of Delhi secures a ratio of 30%, indicating a step up from the prior 29%. Bengaluru trails at 28%, showcasing an advancement from its former 27%. These insights were unveiled via the latest report issued by Knight Frank on Wednesday.

    Throughout the span of 2023, the real estate landscape in multiple cities has witnessed a dip in affordability, attributed to the surge in home loan rates. Amid the top eight cities, Ahmedabad emerges as the most economically accessible housing market, boasting an affordability ratio of 23%. Pune and Kolkata closely tail with ratios of 26% each.

    The Affordability Index, a metric assessing the Equated Monthly Instalment (EMI) to income ratio for a median household, reflects a persistent positive trajectory from 2010 to 2021 across the eight premier cities. This trend was particularly accentuated during the pandemic, an epoch when the Reserve Bank of India (RBI) substantially curtailed interest rates to their lowest in a decade. However, subsequent to that phase, the central bank has incrementally elevated the REPO rate by 250 basis points to counter mounting inflation. This collective action has led to an average 2.5% reduction in affordability across the urban centers, consequently magnifying the EMI burden by 14.4%. Notably, in spite of this scenario, demand has exhibited resilience, surging to multi-year highs this year.

    Knight & Frank CMD Shishir Baijal underscored, “The persistent outperformance of the mid and premium segments underscores a significant transformation in the fundamental structure of the residential market. However, the 250 basis points rise in policy rates has moderately affected affordability across diverse markets. Further escalations in interest rates could conceivably curtail homebuyer capacity and sentiment.”

    While the overall demand has preserved its vigor, specific market segments have undergone noteworthy shifts. The mid and premium segments (spanning from ₹50 lakh to ₹1 crore and beyond) have exhibited consistent outperformance compared to the broader market. Conversely, sales in the sub-₹50 lakh category have witnessed a decline. This segment of homebuyers relies extensively on home loans and is thus more responsive to interest rate hikes, as opposed to those in the mid and premium segments. This dynamic has significantly impacted demand within this category. Intriguingly, sales within the mid-segment now surpass those in the affordable segment, with the premium segment also rapidly catching up.


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