The steep rise in housing prices in metros has forced thousands of salaried people to postpone or downgrade plans for decent housing as the required loan amount and equated monthly installments (EMIs) have almost doubled.

Consider this. The price of a decent two-bedroom apartment in Mumbai suburbs went for around Rs 25 lakh last year, but the same now sells for nothing less than Rs 40 lakh. Ditto is the case in Delhi and Bangalore.

To finance this, you would require a Rs 34 lakh loan, on which monthly installment works out to Rs 30,591 (at 9 per cent interest for 20 years). The rising interest rates have added to the cost. Unless your net take-home salary has increased by 63 per cent or more over last year, you would not be able to buy a similar home (See Table).

Says Harsh Roongta of Apnaloan: ‘‘We are seeing the young middle class couple being edged out. Earlier they could buy a house that was around four times their annual salary, but now the property prices are over six times annual salaries. They have either to look for houses in distant suburbs or look for smaller houses.”

Even if a house buyer is ready to borrow this huge amount, banks have tightened the procedure to get a loan. ‘‘Banks have started asking more questions to potential borrowers. They are now increasingly worried about defaults,’’ said a banking source.

Rajiv Sabharwal, general manager, ICICI Bank, points out that salary levels have gone up and so has affordability, but ‘‘customers are cushioning the impact of higher prices by increasing tenures and buying budget homes.’’

... contd.