Mumbai, Aug 7 (IANS): Home affordability has remained stable in the first half this year as interest rates have stayed steady since the end of 2023, a report showed on Wednesday.

According to Knight Frank India’s Affordability Index, Ahmedabad is the most affordable housing market among the top eight cities, with a ratio of 21 per cent.

It is followed by Pune and Kolkata at 24 per cent each. Mumbai was the only city that remained marginally higher than the threshold at 51 per cent.

Stable affordability is essential to sustaining homebuyer demand and sales momentum, which, in turn, acts as a key economic driver for the country.

“As income levels rise and economic growth strengthens, end-users financial confidence is significantly bolstered, encouraging them to make longer-term financial commitments toward asset creation,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

Given the RBI’s healthy 7.2 per cent GDP growth estimate for FY 2025 and a stable interest rate scenario, income and affordability levels are expected to continue to support homebuyer demand in 2024, he noted.

The report witnessed steady improvement from 2010 to 2021 across the eight leading cities of India, especially during the pandemic when the RBI cut policy repo rate (REPO) to decadal lows.

The central bank subsequently raised the REPO rate by 250 bps in a space of nine months starting May 2022 to address growing inflation.

This impacted affordability across cities in 2022. As the REPO rate has remained steady since February 2023, healthy income growth has helped counteract rising prices and comparatively high interest rates, bringing affordability back to the current levels, the findings showed.

Demand has continued to grow since 2023 and has sustained at multi-year highs in H1 2024.

The stable interest rate scenario is expected to sustain in the near term, as economic growth continues to remain on track, the report mentioned.