Homebuyer affordability remained broadly supportive across India's residential markets in H1 2026, with six of eight major tracked cities staying within the critical 50 per cent affordability threshold, according to a Knight Frank India report released on 4 July 2026. The findings come on the back of 125 basis points of cumulative monetary easing by the Reserve Bank of India (RBI), which has lent visible support to home loan affordability.

City-wise Affordability Rankings

Ahmedabad emerged as the most affordable city among the top eight, recording an affordability ratio of just 23 per cent — meaning homebuyers in the city spend roughly a quarter of household income on equated monthly instalments (EMIs). Kolkata followed at 25 per cent and Pune at 28 per cent, both comfortably within the threshold.

At the other end of the spectrum, the Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) remain above the 50 per cent affordability threshold, indicating that homebuyers in these markets are under comparatively greater financial strain. Affordability worsened marginally in Bengaluru (now at 35 per cent) and NCR (at 65 per cent) relative to 2025, while the remaining markets held largely stable.

How the RBI Rate Cycle Shaped the Market

The affordability index — which measures the share of household income directed toward home loan EMIs — has tracked closely with India's monetary policy trajectory over the past four years. Affordability improved sharply during the pandemic years as the RBI cut the policy repo rate to decadal lows, enabling cheaper home financing.

That tailwind reversed from May 2022, when the central bank raised the repo rate by a cumulative 250 basis points over a compressed nine-month window in response to elevated inflation, squeezing EMI affordability. Rate stability from early 2023 onward helped arrest further deterioration, though rising property prices — particularly in NCR — kept affordability stretched in premium markets.

The RBI's more recent easing cycle, delivering 125 basis points of cumulative rate cuts ahead of the current pause, has partially reversed the 2022 damage and is expected to continue supporting residential demand through H2 2026, the report noted.

What Industry Leaders Are Saying

Shishir Baijal, International Partner, Chairman and Managing Director of Knight Frank India, acknowledged that affordability gains have moderated, primarily due to rising property prices. 'However, healthy employment, stable incomes and supportive financing conditions continue to underpin demand,' he said. 'Going forward, sustained income growth and balanced market fundamentals will be critical to maintaining housing affordability and supporting long-term market growth,' Baijal added.

Outlook for H2 2026

The cumulative benefit of lower borrowing costs is expected to sustain housing demand near the post-pandemic highs recorded in 2024, according to the report. However, the pace of property price appreciation — especially in MMR and NCR — remains a structural risk to affordability if income growth does not keep pace. Analysts will be watching whether the RBI resumes its easing cycle or holds rates, as any further cuts could provide additional relief to homebuyers in overheated markets.