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MUMBAI: Property consultancy Knight Frank's latest proprietary Affordability Index, which tracks the EMI to income ratio for an average household, has shown improvement in housing affordability over the last decade. EMI is short for equated monthly installment. A decline in house prices coupled with low home loan interest rates have helped improve housing affordability in 2020, it said.

According to the report, among the top eight cities, Ahmedabad is the most affordable housing market in India with an affordability ratio of 24%. It is followed by Pune and Chennai at 26% each in 2020.

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For Mumbai, the most expensive property market, the affordability ratio has improved from a high of 93% in 2010 to 61% in 2020, said the report. It should be noted that Maharashtra government has reduced stamp duty from 5% to 3% for a limited period. Channel checks by brokers show that developers are willing to give additional discounts to offload ready-to-move in property, especially for markets like Mumbai, where the pile of unsold inventory is huge.

These efforts seem to be yielding some results in luring fence-sitters to the cash-starved real estate sector. According to Antique Stock Broking Ltd, Mumbai has seen a major jump in the registration of housing sales in December, with total registrations at 18,854 translating to 103/193% increase, sequentially and annually, respectively. “Although few super premium projects saw significant discounts and non-premium segments saw marginal price-cuts initially, currently no significant discounts being offered. As per our channel checks, in other markets too, sales velocity saw improvement but not to the extent of buoyant level being witnessed in Mumbai," they said in a report on 31 December.

Analysts expect listed companies with stable balance sheets to report decent numbers in the December quarter earnings. However, they do not expect the overhang of high inventory pile to ease soon. A foreign research house says, data for Q3 residential sales points to a sequential recovery in new sales. However, despite this improvement, sale of residential property is still down 40% year-on-year.

Analysts caution that the drag of job and income losses may shrink the overall realty demand going ahead.

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