Hyderabad Ranks Third Most Expensive Housing Market

Knight Frank India has released its proprietary Affordability Index for the first half (H1) of 2026, providing a detailed look at the financial accessibility of homes across India’s top eight cities. The index measures the proportion of household income required to fund the monthly EMI for a housing unit. According to the report, an EMI-to-income ratio exceeding 50% is generally considered unaffordable, as this represents the threshold beyond which banks rarely approve mortgage applications.

Hyderabad’s Position in the Market:
Hyderabad has been identified as the third most expensive residential market among the top eight Indian cities. The city recorded an Affordability Index of 41% for H1 2026, meaning 41% of an average household’s income is dedicated to servicing home loan installments. This figure indicates that Hyderabad’s housing market affordability has remained stable compared to the end of 2025.

National Trends in Housing Affordability:
The report highlights a varied landscape of affordability across India’s major metropolitan regions:

The Unaffordable Threshold: Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) remain above the 50% threshold, with ratios of 69% and 67% respectively, marking them as the most expensive markets in the country.

Most Affordable Markets: Ahmedabad maintains its status as the most affordable housing market with a ratio of 23%, followed by Kolkata (25%) and Pune (28%).

Market Shifts: Affordability worsened slightly in Bengaluru (35%) and NCR (65%) compared to 2025 figures, while most other tracked markets showed stability.

The Impact of Economic Drivers:
The residential market in India continues to be influenced by a complex interplay of monetary policy and market dynamics. The Reserve Bank of India (RBI) has implemented a cumulative 125 basis points of easing, which has provided crucial support to homebuyers. However, while interest rate stability from early 2023 onward helped normalize affordability, rising property prices have kept the index levels elevated in certain regions.

The Monetary Policy Committee (MPC) has maintained the repo rate at 5.25% in its February and June 2026 meetings, influenced by factors such as global energy price risks and domestic monsoon uncertainties. Despite these headwinds, the report notes that healthy employment levels and stable incomes remain strong structural drivers for residential demand.

Future Outlook:
Commenting on the findings, Shishir Baijal, Chairman and Managing Director of Knight Frank India, noted that housing affordability remains a primary driver of residential demand. “While affordability gains have moderated due to rising property prices, healthy employment and supportive financing conditions continue to underpin the market,” said Baijal.

Knight Frank expects that the cumulative benefits of past monetary easing and strong domestic fundamentals will continue to support housing demand across most major cities through the second half of 2026, provided that income growth remains consistent and market fundamentals stay balanced.