Mumbai: The ability to own a residential property in Mumbai has seen the maximum improvement when compared to other leading metros over the last eight years. While Mumbai is still the most expensive city, with a family requiring seven times its annual household income to buy a residential unit in the city, property consultant firm Knight Frank said that the home price to income ratio has come down drastically on account of several factors.
The firm’s proprietary affordability index, which examines the house price to income at a given period of time, showed that a house in Mumbai will now cost approximately seven times the annual household income against 11 times in 2010. Ideal affordability is identified at 4.5 times the average annual household income in a city. This ratio has similarly come down to five times for the national capital region (NCR) and Hyderabad against six times in 2010.
One of the factors that has contributed to the growing affordability according to Knight Frank is the decline in average size of residential units at launch during the period. The average size of the residential units in Mumbai saw the sharpest decline of 25 per cent followed by Pune (24 per cent) and Bengaluru (18 per cent).
Secondly, the high level of unsold inventory and the introduction of the Real Estate (Regulation & Development) Act that requires developers to meet the project deadline have forced them to cut prices.
“Annual apartment sales peaked in 2011 and since the recorded consistent year-on-year decline till 2017,” the firm said.