Housing affordability in the country has worsened in past 4 years: RBI survey

Affordability in the country`s housing sector has deteriorated in the last four years, despite hype over affordable housing in the past few years, said an RBI report, adding "Housing affordability worsened over the past 4 years as the house price to income (HPTI) ratio increased from 56.1 in March 2015 to 61.5 in March 2019." 

According to the Residential Asset Price Monitoring Survey, Mumbai remains the least affordable city in India, while Bhubaneswar remains the most affordable among the 13 cities studied by RBI. The survey was conducted in Mumbai, Chennai, Delhi, Bengaluru, Hyderabad, Kolkata, Pune, Jaipur, Chandigarh, Ahmedabad, Lucknow, Bhopal and Bhubaneswar.

The movement of median loan to income (LTI) ratio also confirms worsening housing affordability as it moved from 3.0 in March 2015 to 3.4 in March 2019, the report said. The affordability was measured by comparing the price to the monthly income of average home loan borrowers. 

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The survey further observed that the median loan-to-value (LTV) ratio moved from 67.7 per cent to 69.6 per cent between March 2015 and March 2019, showing that banks have become increasingly risk tolerant. Notably, LTV is a measure of credit risk on housing loans.

The median EMI-to-Income (ETI) ratio, however, remained relatively steady during the past 2 years, with exceptions of Mumbai, Pune and Ahmedabad which recorded higher median ETI compared to other cities.