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Business EconomyPosted at: Oct 28 2020 3:52PM


Home purchase affordability improves in 2020 across major cities in India: JLL

Mumbai, Oct 28 (UNI) JLL announced the launch of its annual Home Purchase Affordability Index
(JLL HPAI) today which shows that from 2011 to 2020, home purchase affordability improved across key Indian cities which were part of the Index. This was despite a bigger fall in annual household income as compared to residential property prices. A sharp decrease in the cost of funding (average home loan rates reduced from ~8.9% in 2019 to 7.5% in 2020), more than offset the adverse impact of lower incomes on affordability, the report added.
“We believe that the initial signs of revival were visible in the residential market in the third quarter of 2020, with sales of residential units witnessing an uptick. Furthermore, our analysis suggests that despite a fall in household income in 2020, home purchase affordability has increased in 2020 across all the markets under consideration,” said Ramesh Nair, CEO and Country Head, JLL India. “Interestingly, in 2021, we’re expecting home purchase affordability to either remain at similar levels or improve. But the broader recovery of the residential market and the likely pace of translation of demand into actual sales volumes will be dependent largely upon the economic environment and the prevailing consumer sentiments,” he added.
Until 2019, JLL HPAI indicated that Hyderabad was the most affordable residential market. In 2020, Kolkata overtook Hyderabad to become the best market in terms of home purchase affordability. Mumbai continued to be the only market below the affordability threshold of 100. However, the report points out that Mumbai is the fastest moving city, showing a significant improvement on JLL HPAI from 47 in 2011 to 95 in 2020.
“The future of the residential market and the sustenance of the recovery process depends on the
containment of the virus. 2021 can pan out in two different ways. If the virus is contained by Q1 2021 and economic activity resumes at full capacity, affordability is expected to improve across all the cities under consideration. In fact, in this scenario Mumbai is expected to breach the affordability threshold. If the virus outbreak is not contained in the first quarter of 2021 and economic activity remains subdued, affordability levels are likely to remain at similar levels in most cities,” said Samantak Das, Chief Economist and Head of Research & REIS India, JLL.
JLL HPAI signifies whether a household earning an average annual income (at an overall city level) is
eligible for a housing loan to buy a 1,000 sq ft residential property in the city, at the prevailing market price and home loan interest rate. It analyses the interplay between three pivotal factors - property prices, income and home loan rates to determine the current and the emerging trends in the home purchase ability of urban households. The index covers the top seven markets in India - Mumbai, Delhi NCR, Bengaluru, Chennai,Pune, Hyderabad and Kolkata.
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