1、jll.co.inIndia|2022Home Purchase Affordability IndexHome Purchase Affordability Index 2022|230,18333,65637,26134,98238,53339,43036,51128,82827,34610,74314,37221,75028,23019,62533,46346,74651,82553,12156,658010,00020,00030,00040,00050,00060,000Q12018Q22018Q32018Q42018Q12019Q22019Q32019Q42019Q12020Q22

2、020Q32020Q42020Q12021Q22021Q32021Q42021Q12022Q22022Q32022Number of UnitsUnits SoldAverage quarterly salesbetween 2018&2021Indias housing markets have been on an unprecedented upcycle post the first COVID wave,barring the period of Q2 2021 which coincided with the worst pandemic surge.Despite the pan

3、demic,the fundamentals of affordability synergy with historic lows in interest rates and price stagnancy in primary markets amounting to a time correction all were cues for a recovery to play out.The positive push,came from the unlikeliest of sources with the pandemic completely changing the dynamic

4、s around home ownership with homes becoming a safe haven and spurring a largely unforecasted market recovery.The recovery trend since then has resulted in quarterly sales rising to their historic peaks with sustained buying activity supported by most demand drivers still intact to a great extent.We

5、are now entering the territory of a rising interest rate cycle,driven by global macroeconomic headwinds.At the same time,residential markets have displayed price growth of varying strengths across cities with robust demand and cost-push inflation from rising input material prices playing their respe

6、ctive parts.While affordability is likely to be impacted,the momentum-inhibitor looks to be a temporary one with Indias focus on economic growth and likely easing of inflationary pressures expected to reverse the current interest rate growth.While affordability is decidedly weakening,we are still so

7、me way off the worst affordability periods for all cities and unlikely to see a repeat of those levels.This with better future sentiment is expected to keep the residential markets in an upbeat mood for the next year as well.Residential sales build on recovery sentiment with successive peaksIntroduc

8、tionNote:Figures represent aggregate apartment 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 MumbaiSource:RealEstateIntelligenceService(REIS),JLLResearchWhile affordability will continue to

9、play a key role,multiple other factors are at play when predicting the performance of Indias residential markets.The JLL Home Purchase Affordability Index,first introduced in 2019 is a dynamic tool that juxtaposes household income over home loan rates and property prices to make a determination of h

10、ome purchase affordability across the key markets in India.The results from the first three studies clearly reveal that affordability across the seven key residential markets in India started to improve from 2014 onwards until affordability hit its peak by end of 2021.A combination of rising interes

11、t rates and prices has dampened affordability in 2022 and it is likely to further erode in 2023 amid rising acquisition costs even as incomes get adversely impacted by inflationary pressures and recessionary headwinds.The impact would however be varied across markets.Home Purchase Affordability Inde

12、x 2022|3Home Purchase Affordability Index 2022|4JLL Researchs analysis shows that the three defining factors home price stability,rising household incomes amid a low interest rate regime,seldom come together.When property prices stagnated for large periods of time between 2014 to 2018 and even furth

13、er in some markets and household incomes were rising,interest rates remained sticky at moderately high levels.In COVID,interest rates declined to their lowest but declining income levels delayed recovery.In H2 2021 till H1 2022 all came together in sync as income recovery,low interest rates and rela

14、tive price stagnancy with attractive deals came together to create a recovery scenario the sector had been waiting for and thereafter the only way has been up.Thebestthingscomeinthreesprices,incomesandinterestcostsThe current year has built on the gains with healthy growth in economic output resulti

15、ng in household incomes likely to rise by an average of 7%.Residential prices have also risen driven by robust demand and pass-through of rising input costs onto homebuyers with the price growth averaging 4-10%across the major cities.All three critical elements of affordability are now on a trajecto

16、ry that is likely to worsen affordability levels.Macroeconomic headwinds and inflationary pressures are likely to slow down household income growth,with residential prices under pressure as input cost increases are yet to be transmitted fully.The same holds true of mortgage rates as the current repo

17、 rate hikes(190 bps since May 2022)are yet to be fully transmitted while another round of hikes is likely over the next monetary policy review cycle.Home Purchase Affordability Index 2022|51,18,4322,16,7621,70,8831,92,3861,93,2421,65,7911,57,7941,46,85295,7741,36,0821,43,30274,2111,28,0641,61,6044.8

18、%6.2%8.5%8.0%7.8%8.0%6.8%6.3%6.0%6.5%5.2%4.0%4.0%5.9%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%050,0001,00,0001,50,0002,00,0002,50,0002009200001920202021 Q1-Q32022Repo Rate%Number of UnitsUnits SoldRepo RateSource:Real Estate Intelligence Service(REIS),JLL ResearchKolk

19、ata,227Delhi NCR,202Bengaluru,212Chennai,197Pune,236Mumbai,246Hyderabad,2220026020000202021 2022E 2023F2011:Annual Household Income=100Source:Real Estate Intelligence Service(REIS),JLL ResearchAnnual Household Income IndexMumbai,136Delhi NCR,150

20、Bengaluru,154Chennai,123Kolkata,132Pune,140Hyderabad,00002020212022E 2023F2011:Residential Prices=100 Source:Real Estate Intelligence Service(REIS),JLL ResearchResidential Price IndexHome Purchase Affordability Index 2022|6KnowyourtermsHPAI is t

21、he 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 h

22、ousehold has exactly enough income to qualify for the loan A value less than 100 implies that an average household does not have enough income to qualify for a housing loan A value of more than 100 implies that an average household has more than enough income to qualify for the home loanApproach&Met

23、hodologyJLL 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 inclu

24、de 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 p

25、revailing 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 buyers side.Hence,we have kept the saleab

26、le 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 yearsArea of the property:1,000 sf(saleable area)across citiesHome loan interest rates:Average mortgage rates in public se

27、ctor banks for respective yearsLoan tenure:20 yearsTo arrive at the eligible household income,the following assumptions are made:Loan to Value(LTV):Maximum loan offered is 80%of the property valueDebt to Income ratio:40%of the gross total incomePerfectstormabatesasheadwindsswirl47 43 100 92 20112012

28、2000022E2023FMumbai83 65 106 140 121 200002020212022E2023FDelhi NCR113 90 185 167 200002020212022E2023FBengaluru140 111 196 174 200002020212022E2023FHyderabad101 90 108

29、 195 183 200002020212022E2023FPune93 90 110 181 161 200002020212022E2023FChennaiSource:RealEstateIntelligenceService(REIS),JLLResearchHPAI trends for the top seven cities104 87 110 212 192 200002020212

30、022E2023FKolkataHome Purchase Affordability Index 2022|7Mumbais affordability under slight threat in 2022 and beyond breach the affordability threshold in 2021 Mumbai has been the fastest-moving city in terms of its HPAI score improvement and became an affordable market with its threshold hitting 10

31、0.It is likely to slip below the threshold value of an affordable market but only slightly given all the macroeconomic headwinds but still remain much above its HPAI low of 43 in 2013.Kolkata,Hyderabad and Pune to remain most affordableKolkata is still on track to remain the most affordable resident

32、ial market in the country among the top seven cities,while Pune and Hyderabad will follow,albeit all three will show progressively lower affordability levels compared to 2021 for both 2022 estimates and 2023 forecasted values.Affordability was at its highest in 2021 with decadal low interest rates,a

33、ttractive prices and household income recovery all coming together to create the perfect storm.In 2022 we have seen affordability gains mitigated as inflationary pressures have caused developers to pass on the rise in input costs onto the buyers,demand has supported price increases and the RBIs repo

34、 rate hikes have resulted in higher home loan costs.Home Purchase Affordability Index 2022|8Abuyersmarketstill?201320212022E2023FDelhi65140125121Kolkata87212193192Hyderabad4Chennai90181162161Bengaluru90185168167Pune90195183183Mumbai431009292HPAI movement through the decadeHome Purchase Af

35、fordability Index 2022|9Affordability was at its lowest for all cities in 2013,with Mumbai being the most unaffordable with the average household income being enough to just qualify for a home loan to purchase less than half the size of a 1,000 sq ft apartment.JLL Researchs analysis reveals that bet

36、ween 2013 and 2021,affordability increased consistently across all cities and hit peak values,marking the best time for home purchases.COVID brought about an unprecedented trend where household incomes dipped 3-6%across the cities in 2020 on account of job losses,salary cuts and a rise in unemployme

37、nt.Residential prices during this time were largely steady with a downward trend as developers offered straight price discounts,sops and freebies while government incentives also supported an effective price cut of 1-3%,but not unlike what was the trend in previous years.In 2021,the resumption of ec

38、onomic activities by the second half spurred a recovery in household incomes while improving buyer activity also supported minor price increases.In fact,affordability was at its best across all cities in 2021,marking it as the most opportune time for home purchases.Affordability levels are likely to

39、 trend down through end of 2022 and thereafter in 2023 as well.Mortgage rates are likely to move up further to near 8-year highs.Price pressures and slower income growth are further likely to create a temporary glitch for affordability,though it should remain attractive and second only to the highes

40、t affordability levels seen in 2021.Momentum is likely to sustain also on the expectations of moderating inflation supporting a reversal in repo rate hikes even as longer loan tenures and pricing deals will be likely measures from stakeholders to keep buyers affordability levels within comfort.Home

41、Purchase Affordability Index 2022|10AtestofdemandelasticityThe swirling inflationary pressures and sluggish growth indicators have created an interesting scenario where interest rates are in an upcycle,driven also as a reaction to global central banks hiking their rates.Amid impending global recessi

42、on fears,it is unlikely that India will remain fully insulated and moderated growth rates will also spur lower income growths and slightly bearish household expectations.At a time when developers are grappling with high input cost pressures and have yet to pass on these costs fully,affordability lev

43、els for 2022 are estimated to see a y-o-y decline in a decade.The rising interest rates present another challenge for stakeholders to ensure optimum affordability levels.What remains pertinent is that we are coming off an 18-month period of a robust recovery in residential demand even as prices and

44、interest rates have moved up during the latter part of this timeframe.And affordability despite the estimates of a decline will still remain quite attractive and second best only to 2021.Also worth recognizing is the fact that homebuyers take into account prevailing economic scenario,employment mark

45、et prospects,income&job stability and future expectations of income,savings and inflation.Hence,affordability is a necessary but not a sufficient condition for home purchase decisions.The affordability score is a stepping stone for developers and other stakeholders toward strategic decision-making a

46、round project activity,pricing decisions,and other relevant parameters that could impact the affordability quotient of a prospective homebuyer.We have enough past evidence to see that demand could show relatively low elasticity to prices if other determining factors like mortgage rates and macroecon

47、omic parameters remain in the red.On the other hand,unchecked price escalation could also adversely affect buyer sentiment.A true test of demand elasticity will be to ensure a fair price discovery mechanism and compliance-driven market practices by the residential sector supported by affordability t

48、hrough policy rate interventions and economic growth aiding an adequate rise in household incomes.The residential market stakeholders and policymakers need to remain in sync and also agile to ensure that the sector continues to remain in the pink of health.Home Purchase Affordability Index 2022|11jl

49、l.co.in 2022 Jones Lang LaSalle Property Consultants(India)Pvt Ltd.All rights reserved.All information contained herein is from sources deemed reliable;however,no representation or warranty is made to the accuracy thereof.Dr.Samantak Das Chief Economist and Head Research&REIS India,JLL Research Enqu

50、iries Bina Udeshi Senior Executive,Research&REIS India,JLL AuthorsKetan Bhingarde Manager,Research&REIS India,JLL Rohan Sharma Senior Director,Research&REIS India,JLL Business EnquiriesAbout JLL JLL(NYSE:JLL)is a leading professional services firm that specializes in real estate and investment manag

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