Mumbai Property Market Still India’s Least Affordable Despite Lower Home Loan Rates: Knight Frank H1 2026 Report

High Home Prices Continue to Keep Homeownership Out of Reach for Many Buyers in MMR

The Mumbai Metropolitan Region (MMR) continues to be the most expensive housing market in India, even after lower home loan interest rates improved affordability in several other cities. According to Knight Frank India's Affordability Index H1 2026, homebuyers in MMR still need to spend around 69% of their monthly household income on home loan EMIs, making it the least affordable residential market in the country.

The report shows that although financing costs have fallen due to lower interest rates, rising property prices in Mumbai continue to offset much of that benefit. As a result, buying a home in the country's financial capital remains a major financial challenge for many families.

Knight Frank Report Highlights MMR’s Affordability Challenge

Knight Frank’s Affordability Index measures the percentage of a household’s monthly income required to repay the EMI for a standard home loan. A ratio above 50% is widely considered financially stressful because lenders generally prefer borrowers whose loan repayments remain below that level.

According to the latest report, MMR recorded an affordability ratio of 69% in the first half of 2026, unchanged from 2025. While this is an improvement from the 77% levels recorded in 2016 and 2019, the region still remains far above the accepted affordability benchmark.

The report also found that the National Capital Region (NCR) is the only other major housing market where affordability remains above the 50% threshold. Most other leading Indian cities have shown healthier affordability levels after lower borrowing costs.

Lower Interest Rates Helped Most Cities, But Not Mumbai

The report explains that lower home loan rates have helped improve affordability across India's residential market over the past year. The improvement follows the Reserve Bank of India’s cumulative 125 basis points reduction in policy rates, which lowered borrowing costs for homebuyers.

Lower EMIs have encouraged home purchases in many cities and helped maintain strong residential demand despite rising property values. However, Mumbai’s exceptionally high real estate prices continue to reduce the benefits of cheaper loans.

As a result, buyers in MMR still need to allocate more than two-thirds of their monthly income toward housing loan repayments, making homeownership significantly more expensive than in other major Indian cities.

Housing Affordability Has Improved Over the Past Decade

Knight Frank noted that housing affordability improved steadily between 2016 and 2021, mainly because of lower interest rates during and after the pandemic.

The situation changed in 2022, when the Reserve Bank of India increased the repo rate by 250 basis points to control inflation. Higher borrowing costs pushed EMI payments higher and reduced affordability across the housing market.

Since early 2023, interest rates have stabilized, and recent monetary easing has helped improve financing conditions once again. However, the continued rise in residential property prices has limited the overall gains for homebuyers, especially in premium markets like Mumbai.

Stable Repo Rate Expected to Support the Housing Market

The report also points out that the Reserve Bank of India’s Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.25% during its meetings in February and June 2026.

The central bank maintained a cautious approach due to uncertainties surrounding global geopolitical developments, energy prices, and weather-related risks such as the monsoon. Stable policy rates are expected to provide predictable financing conditions for homebuyers and developers in the near future.

Expert Says Affordability Remains the Key Driver of Housing Demand

Commenting on the report, Shishir Baijal, International Partner, Chairman and Managing Director of Knight Frank India, said housing affordability continues to play a critical role in supporting residential demand across the country.

He noted that lower borrowing costs have benefited homebuyers in most markets. However, increasing residential property prices have reduced part of those gains. According to him, sustained employment growth, rising household incomes, and balanced market conditions will remain essential for maintaining healthy demand in the housing sector over the coming years.

Mumbai’s Strong Demand Continues Despite Expensive Homes

Despite affordability challenges, Mumbai continues to witness healthy residential demand. Industry reports over the past year have consistently shown strong housing sales across MMR, supported by the city's economic importance, infrastructure expansion, and steady demand from both end-users and investors.

Major infrastructure projects, including the Mumbai Coastal Road, Mumbai Metro expansion, Navi Mumbai International Airport, and the Mumbai Trans Harbour Link, have strengthened long-term confidence in the region's real estate market. However, these improvements have also contributed to higher property values in several micro-markets.

As demand remains strong and land availability stays limited, housing prices in Mumbai continue to rise faster than income growth, making affordability one of the biggest challenges for future homebuyers.

Outlook for MMR Housing Market

Knight Frank’s H1 2026 Affordability Index suggests that lower interest rates alone may not be enough to make Mumbai’s housing market more affordable. While reduced borrowing costs have provided some relief, the city's high residential prices continue to place homeownership beyond the reach of many middle-income buyers.

Going forward, improvements in affordability are likely to depend on a combination of stable financing costs, steady income growth, and balanced property price appreciation. Until these factors align, Mumbai Metropolitan Region is expected to remain India's least affordable residential property market despite favorable lending conditions.