Average household income outpaces home price rise in Mumbai: Report

[] Mumbai has emerged as one of the ‘more affordable’ cities in the world, with average household incomes rising faster than property prices, says a report by Knight Frank

Mumbai recorded the third-highest growth in annual household incomes at 20.4% over a five-year period from 2014 to 2018, according to the inaugural issue of Knight Frank’s global report, ‘Urban Futures’. The growth in housing prices in the same period in Mumbai was only 8%, the report added. San Francisco in the US saw the highest rise in annual income at 25% in the five-year period, while Amsterdam at 63.6% (the Netherlands) recorded the highest rise in housing prices between 2014 and 2018. The report evaluated 32 cities across the world, to understand the difference between house prices and income and estimated the gap to be USD 740 billion in 2018.

You are reading: Average household income outpaces home price rise in Mumbai: Report

Rank City Housing growth (percentage) Percentage growth in income
1 San Francisco 41.8 25.6
2 Moscow 0.1 22.7
3 Mumbai 8 20.4
4 Los Angeles 25.5 15.4
5 Singapore -2.8 14.9
6 Auckland 47 14.7
7 Kuala Lumpur 21.8 13.2
8 Dublin 61.9 13.2
9 Bangkok 33.3 12.2
10 Vancouver 57.6 12

Source: Knight Frank Research

Despite being India’s most expensive real estate market, Mumbai emerged among the more affordable cities amongst its global peers. Mumbai has seen real household income growth outpace real house price growth by 12.4%, indicating an improvement in affordability. The real house prices in comparison, have grown at a much slower pace of 8%, while the real disposable household income growth was over 20.4% in the five-year period ending 2018. The affordability in the city improved on account of reduced size of units, with largely stable prices. Consistent reduction in apartment sizes has also lowered the average ticket price for Mumbai. It is estimated that on an average, newly launched homes are smaller by 25% between 2014 and 2018. Maximum launches, especially in the last two years (2017 and 2018) have been in the affordable and mid-range segments, with ticket prices not exceeding Rs 75 lakhs.

Key findings of the report

  • Mumbai along with Moscow, Singapore and Paris saw their average real income grow faster than real house prices.
  • The Indian government’s initiatives, such as the Credit-Linked Subsidy Scheme (CLSS) and Pradhan Mantri Awas Yojana (PMAY), which aims to ensure 20 million affordable homes by 2022, have worked well.
  • Mumbai is one of India’s most expensive housing markets but has seen the affordability of homes significantly increase in the last few years. It is now estimated that a house in Mumbai will cost approximately seven times the annual household income, against 11 times in 2014.

[] Property prices and trend forecast for key metro cities in 2019

Commenting on the report, Shishir Baijal, chairman and managing director, Knight Frank India, said, “Mumbai’s residential housing shortage has been a reason for concern, for most urban development agencies including the government. Similar to other global cities, Mumbai adds many new settlers every year, making it a difficult place to find housing. However, despite having India’s most expensive real estate, in comparison to its global peers, Mumbai remains more affordable. This should be viewed positively, as it indicates a further possibility of growth of global and Indian organisations in the city, who are always looking at locations that are strategic and yet, within the affordable range. Mumbai has seen a steady increment in average incomes, based on its economic growth, while the reduction in property prices has further enhanced affordability. The city has seen a drop of close to 7% in ticket prices, for new launches in 2018. With the recent announcement on the reduction in GST on under-construction projects, the effective payout by buyers is expected to reduce by a further 6-7%.”

Average household income outpaces home price rise in Mumbai: Report

Knight Frank’s Global Affordability Monitor analysed affordability across 32 cities, by taking into consideration three key measures – house price to income ratio, rent as a proportion of income and real house price growth compared to real income growth. Across the 32 cities, there was an average five-year real house price growth of 24%, while the average real income grew by only 8% over the same period. Overall, New York saw its income growth exceed real house price growth by 3% while Moscow, Singapore, Mumbai and Paris also saw their average real income over the last five years grow faster than real house prices. Moscow saw the largest difference where real income growth outpaced real house price growth by 22%.

Knight Frank global affordability monitor

Least affordable Second least affordable


Hong Kong

Los Angeles

San Francisco

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New York



More affordable Most affordable

Cape Town



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Kuala Lumpur




Sao Paolo

Ways in which cities can tackle housing affordability

(Analysis covers Mumbai, San Francisco, London, Hong Kong and New York)

  • Floor space regulations: If the Indian government were to lift floor space regulations in Mumbai, developers could build vertically, alleviating the pressure for space in the city, while increasing supply.
  • Co-living: A concept on the rise in many global cities.
  • Corporates entering the development space: Facebook’s Menlo Park development consists of 1,500 housing units.
  • Public-private partnerships: For example, Transport for London aims to play an integral role in delivering affordable housing that prioritises quick delivery and multi-tenure options.
  • Cooling measures: Implemented to slow down the property market in cities like Hong Kong. These have had a limited effect but the recent implementation of higher interest rates and a weakening economy led by a falling stock market, may change this.
  • Sustainable micro-homes: These homes, such as the OPod Tube Housing project, are becoming increasingly popular as a result of affordability pressures but their impact has been limited.
  • Reclaiming land: The Hong Kong government is actively trying to extend the amount of land it has to build on, by reclaiming land to create new islands.

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Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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