Bengaluru and Hyderabad were identified among India’s most expensive residential markets in an affordability study that showed rising EMI burdens and declining homebuyer affordability in key metros. Bengaluru ranked as the fourth most expensive real estate market, while Mumbai and Hyderabad were found to be the costliest, with Delhi-NCR also featuring prominently among the high-cost cities.​

Core findings of the report

• Bengaluru’s affordability index reached about 28%, up from roughly 26% a year earlier, indicating that a larger share of household income was being spent on home loan EMIs.​
• The report concluded that Mumbai and Hyderabad had the most expensive residential markets in the country, with Bengaluru and Delhi-NCR following as high-cost markets in terms of EMI-to-income ratios.​
• Ahmedabad, Pune and Chennai were highlighted as relatively more affordable markets, with Ahmedabad retaining its position as one of the most affordable housing destinations among the eight cities covered.​

Why Bengaluru and Hyderabad are expensive

• A series of repo rate hikes by the Reserve Bank of India pushed up median home loan rates, which directly worsened affordability in Bengaluru and other metros.​
• Strong demand in IT-driven markets such as Bengaluru and Hyderabad, combined with limited supply in preferred micro-markets, contributed to higher prices and tighter affordability metrics.​

Impact on homebuyers

• The worsening affordability index means households in Bengaluru and Hyderabad must allocate a higher proportion of income to EMIs, narrowing the space for first-time and mid-income buyers.​
• Analysts quoted in these studies noted that while buyer sentiment remained broadly positive, higher rates and prices were likely to push some buyers towards smaller units, peripheral locations or more affordable cities.​

Position versus other Indian cities

• Among the eight major cities reviewed, Ahmedabad, Pune and Chennai were clubbed as more affordable markets, contrasting with the higher-cost profiles of Mumbai, Hyderabad, Bengaluru and Delhi-NCR.​
• Subsequent price-tracker data for 2023 showed Hyderabad and Bengaluru among the cities with the fastest year-on-year housing price growth, reinforcing their status as some of India’s most expensive real estate markets.​

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