Affordability fires booster in housing sector

    Credai Property Expo
    In its recent finding, mortgage major- HDFC Limited concluded that due to prevailing low inflationary tendencies, home prices have hit record high levels largely due to the fact that rise in disposable income has made purchasing a house the most affordable ever. The average property value of housing units has appreciated to an all-time high of over Rs 50 lakh this year, while the annual income of an average homebuyer has also grown to a record high of over Rs 12 lakh, shows the latest data compiled by HDFC. While property value has risen for seven consecutive years, income level has been on an uptrend for at least 22 years now. A sharper increase in income levels compared with the housing prices has brought down the affordability ratio to 4.1 - the lowest in the history and below the previous all-time low score of 4.3 recorded in the year 2004. As a matter of fact, affordability ratio equals the average property price divided by the annual income and determines how affordable a housing unit is for a homebuyer as per his or her income. A lower ratio means it has become more affordable to purchase the house. HDFC, which has been compiling stats since 1995, said in its latest annual update on the mortgage market in India that improved affordability largely driven by rising disposable income and affordable interest rates on home loans. The affordability ratio stood as high as 22 in 1995, meaning an average home buyer needed to pay 22 times of his annual income to purchase a house whereas this ratio stood at 4.4 in the previous year, it added.
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