India | September 2021

Research Report

Home Purchase
Affordability Index
India’s housing sector was dealt a major blow by the COVID-19 crisis. The sales of residential units plummeted in Q2 2020 with
prospective buyers postponing their purchase decisions. However, recovery in the sector was quick and resilient. Post the 1st
phase of unlock in 2020, the uptick in residential sales was primarily driven by pent-up demand, stagnancy in primary market
rates and state-level incentives being offered by the government. Over the next few quarters, the housing sector witnessed a
fundamental shift in the sentiment towards home ownership. The pandemic brought into focus the need for home ownership
with security, health and wellness on high priority.
The housing market was expected to chart a new growth trajectory in 2021 and the year did start on a positive note. In Q1
2021, sales of residential units increased by 17% while new launches increased by 27% on a sequential basis. But the situation
changed abruptly in the second quarter as the second wave of the pandemic hit the nation unprepared. Despite a sluggish Q2
2021, when sales and launches fell amid lockdown restrictions, the residential market is primed for a robust recovery period.

Residential sales on a recovery path

45,000
40,000 Average quarterly sale
between 2016 & 2019
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Note: Figures represent aggregate unit sales in the top 7 markets of Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai & Pune, Mumbai
includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai
Source: Real Estate Intelligence Service (REIS), JLL Research

Nevertheless, recovery depends on multiple factors with affordability playing a key role. The JLL Home Purchase Affordability
Index introduced in 2019 is a dynamic tool which looks at the interplay between household income, home loan rates and
property prices to measure home purchase affordability across the key markets in India.
The results from the first two studies revealed that affordability across the seven key residential markets
in India increased between 2014 and 2020. The third edition comes at a time when the Indian economy
is recovering from one of the worst recessions till date. Our analysis suggests that home purchase
affordability has increased in 2021 across all the markets under consideration. This trend of increasing
affordability is likely to continue in 2022 in most markets while certain markets might see stagnancy.
Take care and stay safe,

Dr. Samantak Das

Chief Economist and Head - Research
JLL India & Sri Lanka
Samantak.Das@ap.jll.com

2 Home Purchase Affordability Index

 Home Purchase
Affordability improves
across cities

3 Home Purchase Affordability Index

JLL Research’s analysis reveals that between 2013 and 2021, affordability has increased consistently across all
cities. During the current year, household incomes witnessed an increase of 7%-9% (from the low base of 2020)
in the markets under consideration. At the same time, home prices remained stagnant in all the of India’s prime
residential markets except for Hyderabad. Moreover, mortgage rates continue to trend at their lowest in 15
years. This leads to reduced EMIs for homebuyers, thereby, having a significant bearing on affordability.

HPAI on the rise

1E 2011 1E 2011
202 202
2 2
0 102021E
0 47 0 142021E
3 83
2

2
01

01
2
20

20
2

2
94

46

73
Mumbai Delhi NCR
13
20 19

20 19
20 13

20 13
12 7
90

43

65
120
84

53

82
201

201
4

4
201

201
81 12
8

20 61 20
0
1 06 95
71 5 5
17
2 01 6 201 17
2 01 6 201
1E 2011 1E 2011 1E 2011
202 202 202
2 2 2
0 192021E
1 113 0 182021E
5 93 0 192021E
8 101
1
2

2
01

01

01
6 4 6
20

20

20
2

2
96

99
Bengaluru Chennai Pune
17

17

18
04
20 19

20 19

20 19
20 13

20 13

20 13
16 4

16 8

17 8
90

90

90
154

155

167
111

110

108
201

201

201
4

4
201

201

201
14 15 15
121 124 127
8

9 2 9
20 1 33 5 20 1 35 5 20 1 47 5
17
2 01 6 201 17
2 01 6 201 17
2 01 6 201
1E 2011 1E 2011
202 202
2 2
0 202021E
3 140 0 212021E
8 104
1
2

2
01

01

3 1
20

20
2

2
96

Hyderabad Kolkata
19

20
27
20 19

20 19
20 13

20 13
18 9

18 7
111

87
183

174
136

110
201

201
4

4
201

201

17 16
147 130
8

7 5
20 1 58 5 20 1 45 5
17
2 01 6 201 17
2 01 6 201

Source: JLL Research

4 Home Purchase Affordability Index

Mumbai to breach the affordability threshold in 2021

Mumbai was the only market below the affordability threshold of 100. The year 2021 is expected to be the
year when Mumbai breaches the affordability threshold. Moreover, it is important to note that Mumbai is the
one of the fastest moving cities, showing a significant improvement in HPAI from 47 in 2011 to 100 in 2021.

Hyderabad and Pune to scale new peaks on the affordability index

In 2020, Kolkata overtook Hyderabad to become the best market in terms of home purchase affordability.
The current year is expected to witness Hyderabad surpass the 200 mark on the affordability index followed
closely by Pune.

An average income earning household in the markets of Hyderabad and

Kolkata has enough income to qualify for a home loan on two 1,000 sq ft
apartments (or one 2,000 sq ft apartment) at the prevailing market price.

5 Home Purchase Affordability Index

 Home Purchase
Affordability
at an inflection
point

6 Home Purchase Affordability Index

 HPAI is the ratio of the average household income to the eligible household income. Eligible
household income is defined as the minimum income that a household should earn in order to
qualify for a home loan on a 1,000 sq ft apartment at the prevailing market price.

Interpretation:

A value of 100 means that A value less than 100 implies A value of more than 100 implies
a household has exactly that an average household that an average household has
enough income to qualify does not have enough income more than enough income to
for the loan to qualify for a housing loan qualify for the home loan

Note: Refer to the Technical Note at the end of the report for the detailed approach and methodology

The second COVID-19 wave dented the market following a good recovery curve. However, the impact was
muted when compared to the same period last year. Importantly, lockdown restrictions across cities are
being eased and the vaccination drive is gathering pace. Most of the changes witnessed in the sector have
been structural in nature and demand for homes is only expected to increase.

As demand increases, the flexibility being offered by developers is expected to reduce and prominent
developers might even raise prices in new launches as the market sentiment further recovers. In this scenario,
the residential price curve is expected to move up across all the markets. Mortgage rates are unlikely to go up
significantly, since the central bank will continue to boost consumer spending.

Resultantly, home purchase affordability in 2022 is expected to either remain at similar levels or witness a
marginal improvement from the levels of 2021.

Pace of increasing affordability to moderate

ta Mu m ta Mu m
lka ba lka ba
Ko i Ko i
100 102
218 221
d

d
Delh

Delh
Hyderaba

Hyderaba
203

205
143

145
i N CR

i N CR

2021E 2022F

8 0
19

20
91

91
u

1 1
lu r

lu r
Pu

Pu

e 18 5 e 18 8
ga

ga

n n
n

Be Be
Chennai Chennai

Source: JLL Research

7 Home Purchase Affordability Index

Conclusion Affordability is necessary when determining home
purchases, but not sufficient to drive sales. A homebuyer
takes into account the prevailing economic condition,
employment scenario and future income flows.

The housing landscape has improved massively in

terms of transparency and the market is now steeped in
sound fundamentals. The trends in affordability can be
an important feeder into the strategic decision making
of real estate developers and policy makers. Increasing
affordability when combined with policies directed
towards improving the economic outlook goes a long way
in improving the overall health of the residential market.

8 Home Purchase Affordability Index

Technical Note
JLL Home Purchase Affordability Index (HPAI) signifies whether a household earning an average annual
income (at an overall city level) is eligible for a housing loan on a property in the city, at the prevailing market
price. We have derived this index, through a combination of variables which include home loan interest rates,
average household income and price of the residential apartment.

The interplay between property price, income and home loan interest rates influences the ability of a household
to afford a home purchase. The cost of the property is further determined by the per sq ft price prevailing in the
city and the average area of the apartment. It is pertinent to note that a reduction in house size may bring in
affordability, without decrease in per sq ft pricing. However, this reduction in the size of the apartment may be
a compromise on the buyer’s side. Hence, we have kept the saleable area of the house as 1,000 sq ft for a four-
member household.

Assumptions for our analysis:

• Price of the property: Weighted average price

at an overall city level for respective years
• Area of the property: 1,000 sf (saleable area)
across cities
• Home loan interest rates: Average mortgage
rates in public sector banks for respective years
• Loan tenure: 20 years
• To arrive at the eligible household income, the
following assumptions are made:
• Loan to Value (LTV): Maximum loan offered
is 80% of the property value
• Debt to Income ratio: 40% of the gross total
income

How is JLL HPAI calculated?

JLL HPAI is the ratio of the average household income to the eligible household income. Eligible
household income is defined as the minimum income that a household should earn in order to
qualify for a home loan on a 1,000 sq ft apartment at the prevailing market price.

Interpretation:
• A value of 100 means
that a household has
exactly enough income
to qualify for the loan
• A value less than 100 implies • A value of more than 100 implies
that an average household does that an average household has
not have enough income to more than enough income to
qualify for a housing loan qualify for the home loan

9 Home Purchase Affordability Index

 About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment
management. JLL shapes the future of real estate for a better world by using the most advanced
technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for
our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6
billion in 2020, operations in over 80 countries and a global workforce of more than 92,000 as of June 30,
2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further
information, visit jll.com

About JLL India

JLL is India’s premier and largest professional services firm specialising in real estate. With an unaudited
revenue in excess of 4,900 crores for FY 2019-20, the Firm is growing from strength to strength in India for
the past two decades. JLL India has an extensive presence across 10 major cities (Mumbai, Delhi NCR,
Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi and Coimbatore) and over 130 tier II &
III markets with a cumulative strength of close to 12,000 professionals.

Headquartered out of Mumbai, we are India’s premier and largest professional services firm specializing
in real estate. Our services cover various asset classes such as commercial, residential, industrial, retail,
warehouse and logistics, hospitality, healthcare, senior living, data centre and education. For further
information, please visit jll.co.in

About JLL Research

JLL Research provides data analytics and insights through Real Estate Intelligence Services (REIS), thought
leadership and bespoke research. REIS is a subscription based research service designed to provide
cutting edge insights into diverse and challenging real estate markets through collation, analysis and
forecasts of property market indicators across asset classes such as office, retail and residential. Thought
leadership focuses on providing independent insights, analysis and forecasts on key industry trends and
significant regulatory & economic developments impacting the real estate industry. Bespoke research
aims to provide tailor-made solutions to different stakeholders in the real estate sector and ancillary
industries. Our capabilities include market assessment studies, demand-supply analysis, catchment area
analysis, and price benchmarking across asset classes.

10 Home Purchase Affordability Index

 Thought Leadership Compendium
Latest reports for your reading

Occupier Services

Global workforce Shaping Human The A-Z of Future (re) entry: A guide for Workplace
expectations are shifting Experience Workplace Design Design Considerations

Shaping the Asia Pacific Fit-Out Cost Occupancy (re)Imagine Flex

Future of Work Guide 2020/2021 Benchmarking Guide Spaces: A 360° view

Residential and Office Capital Markets

India | July 2021 India | July 2021 India | July 2021

Research Report Research Report Research Report

Residential Market Office Market Capital Market

Update: Q2 2021 Update: Q2 2021 Update: Q2 2021

Residential Market Office Market Capital Markets The India REIT opportunity:
Update Q2 2021 Update Q2 2021 Updates Q2 2021 Momentum accelerates

Logistics & Industrial Data Centre

India Industrial The rise of new

Corridors data centre growth
markets

MMLP: Reshaping India Industrial Corridors: Great places of The rise of new
India’s Logistic Enhancing Manufacturing manufacturing in India data centre
Sector Infrastructure growth markets

For more trends and insights visit JLL.co.in/research

Let’s find a
home that
works for you.
About Residential Services
As urban living experts, we can help you get the most out of the cities you love to live in. Our unique understanding and
research into the residential market means we can support your ambitions to buy, sell, rent, or invest.

We offer our Residential services across Mumbai, Delhi NCR, Chennai, Bangalore, Hyderabad, Kolkata and Pune.
Servicing clients ranging from Individuals to Corporates, Investors to Expats and Developers, our team specialises in all
kinds of real estate requirements pertaining to housing. For those who want to identify new opportunities in residential
and transform them into a reality, we offer a complete end-to-end service. For others with specific requirements,
our specialists can help you achieve the best results. Unbiased advisory backed by real time research is our most
invincible asset. Local market know-how combined with robust processes, a strong in-house research team and
excellent relationships with developers have kept us at the forefront in this segment. Contact us to identify residential
opportunities, simplify complexities, and deliver true success.

Business Enquiries
All India Mumbai & Delhi NCR Hyderabad
Siva Krishnan Ritesh Mehta R Naveen Kumar
MD - Chennai & Coimbatore City Lead City Lead
Head - Residential Services Residential Services Residential Services
Siva.Krishnan@ap.jll.com 99301 77978 99665 06767
Ritesh.Mehta@ap.jll.com Rnaveen.Kumar@ap.jll.com

Bengaluru Chennai
Vijay Murugan Rajeev Sreenivasa
City Lead City Lead
Residential Services Residential Services
99866 14147 98402 89998
Vijay.Murugan@ap.jll.com Sreenivasarajeev.B@ap.jll.com

Research Enquiries Author Media Enquiries

Dr. Samantak Das Vimal Nadar Arundhati Bakshi Dighe
Chief Economist and Head Director Lead - PR and
Research & REIS Research & REIS Communication
Samantak.Das@ap.jll.com Vimal.Nadar@ap.jll.com Arundhati.Dighe@ap.jll.com

Design
Sunita Rajeev
Director - Design
Marketing
Sunita.Rajeev@ap.jll.com

COPYRIGHT © JONES LANG LASALLE IP, INC. 2021

This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed,
which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and
we do not guarantee that the information in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and
are subject to change without notice. Statements that are forward looking involve known and unknown risks and uncertainties that may cause future
realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ
from the views expressed in this report. No investment or other business decisions should be made based solely on the views expressed in this report.