In the light of prevailing property prices in Noida and Gurgaon, the lowest in terms of number of years’ income to buy a house in the developing world, it is a good time to plan a house of your own
Property prices in Noida and Gur gaon have become more affordable for the average homebuyer, with the number of years’ income required to buy a house having declined in the last two years.
In respect of the affordability factor, Noida and Gurgaon are more affordable than other similar destinations like Navi Mumbai and Pune.
In the last three years, between June 2014 and June 2017, the number of years’ income required to buy a house in Noida and Gurgaon improved by 30% and 26% respectively . As the number of years’ income required to buy a house declines, affordability of a house improves.
A KPMG report–Indian Real Estate, Unfolding the new Era of Growth–released at the 14th National Convention of Naredco last week, says that houses in India have become more affordable compared to those in other countries of ASEA (Association of South East Asian Nations) and BRICS (Brazil, Russia, India, China, and South Africa).
Property price to average annual income of a household is far below in India than in countries like China, Vietnam, Singapore, and Thailand.
According to the report, which sourced the data from Numbeo.com, while the majority of nations registered an increase in their property prices to income ratio from June 2014 to June 2017, India’s real estate saw a decline of over 5%, indicating the increasing affordability in the sector.
Data available on Numbeo.com shows that in Noida, while an average Indian would require 6.37 years’ income to buy a house at present, he required 9.07 years’ income to purchase the same house in June 2014. In Gurgaon, too, the number of years’ income required to buy a house has declined from 9.75 years in June 2014 to 7.2 years in June 2017.
The sharp improvement in the affordability factor is due to the combined effect of fall in prices and rise in average income of India. However, in Beijing, it has increased from 33.6 years’ income in June 2014 to 37.7 years’ in June 2017. In London and New York, too, the number of years’ income required to buy a house has increased. Affordability factor: Apart from price, affordability factor also depends on interest rates, which determine the EMI.
In Noida, despite the fact that an average Indian can buy a house with 6.37 years’ income, his EMI would be 74% of his monthly income.But in cities like Zurich and San Francisco, where one needs income of 9.47 years’ income and 9.53 years’ income, respectively, to buy a house, the EMIs here would be only 54% and 68% of their income due to low interest rates.
If the interest rates in India fall by one percentage point, the EMI as percentage of income will fall below 70% of the income.
The fall in prices and interest rates has improved the affordability factor of the average Indian and the present condition provides a good opportunity to buy a house for the double-income middle class family .
Source: Times Properties