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Mumbai Is the World’s Least Affordable Home Market

The average Indian would need to work for three centuries to pay for a luxury home in Mumbai, making that city the least affordable in the world for locals, according to an analysis of real estate and wages.

The CHART OF THE DAY shows a 100-square-meter luxury residence in Mumbai costs about $1.14 million, or 308 times the average annual income in India, based on calculations from a housing index compiled using 63 markets by Knight Frank LLP and income estimates of the U.S. Central Intelligence Agency for purchasing-power parity in 2011. Shanghai buyers would need 233 times the per-capita income in China and Moscow inhabitants 144 times Russian earnings. Singapore and New York homebuyers would need 43 years and 48 years, respectively, for equivalent residences using national income averages, the data show.

Prime-location home prices in Mumbai averaged $11,400 a square meter in the quarter to Dec. 31, while India’s per-capita purchasing power was $3,700, the data show. Shanghai residential prices were $19,600 a square meter and China’s income was $8,400. The Knight Frank Prime International Residential Index is compiled using the top five percent of districts in each city, according to Liam Bailey, London-based head of residential research at Knight Frank.

Photographer: Tim Graham/Getty Images

Mumbai property. Close

Mumbai property.

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Photographer: Tim Graham/Getty Images

Mumbai property.

“There are big differences in wealth levels in emerging markets compared to the developed world, which is part of the course for economic development,” Bailey said in an e-mailed response to questions. “In the first phase of growth some people make big fortunes, it takes time for this to trickle down as the middle class develop and generate their own wealth.”

In a separate study published last month by a unit of Lloyds TSB Bank Plc, India, Russia and South Africa were the best performing housing markets since 2001. Residential prices in India, calculated using an average in major cities nationwide, rose 284 percent in real terms in the period after adjusting for consumer-price inflation.

Japan, Ireland and Germany posted the biggest price declines in the same period, according to the Lloyds TSB report. Japan’s cost-adjusted drop was 30 percent, the data showed.

To contact the reporter on this story: Pooja Thakur in Singapore at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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