Colombo ranked as world’s most unaffordable city for homebuyers in 2026
- Sri Lanka’s commercial capital recorded a price-to-income ratio of 55.1, highest figure among all 395 cities monitored worldwide
- Prospect of homeownership is now statistically more remote in Sri Lanka than in Shanghai, Hong Kong or Mumbai
- Core issue lies in chasm between average earnings and square-footage costs
By Nishel Fernando
Colombo has been identified as the most difficult city globally for local income earners to purchase property in 2026, revealing a severe decoupling between asset prices and domestic wages.
According to the latest Numbeo Property Investment Index, Sri Lanka’s commercial capital recorded a price-to-income ratio of 55.1, the highest figure among all 395 cities monitored worldwide. This ranking places Colombo ahead of notoriously expensive real estate markets, indicating that for the average citizen, the prospect of homeownership is now statistically more remote here than in Shanghai, Hong Kong or Mumbai.
The price-to-income ratio is a fundamental measure of housing affordability, calculating the ratio of median apartment prices to median familial disposable income. Colombo’s score of 55.1 suggests that it would take over half a century of a household’s entire income to purchase a standard apartment, assuming no other expenses. This figure towers over the regional counterparts; Kathmandu ranks second globally, with a ratio of 39.2, followed by Manila at 35.9. Even Mumbai, often cited for its high real estate density and cost, ranks eighth, with a significantly lower ratio of 33.3, while Singapore—a magnet for global wealth—maintains a ratio of 22.1, making it mathematically more accessible for its residents than Colombo is for Sri Lankans.
A deeper analysis of the underlying financial data exposes the structural imbalances driving this ranking. The core issue lies in the chasm between the average earnings and square-footage costs.
The data indicates that the average monthly net salary in Colombo hovers around Rs.70,452. In stark contrast, the price to buy an apartment in the city centre averages approximately Rs.108,442 per square foot. This creates a scenario where a full month’s average salary is insufficient to purchase even a single square foot of prime residential space, a disparity rarely seen in functioning housing markets. Even outside the city centre, the price per square foot remains high at roughly Rs.36,238, absorbing more than half of an average monthly wage.
The affordability crisis is further compounded by the cost of financing. The index highlights that the mortgage interest rates for a 20-year fixed term average 12.94 percent in Colombo. This double burden of record-high asset prices relative to income, paired with the double-digit borrowing costs, effectively locks the middle class out of the property ladder. Consequently, the real estate market appears to be sustaining its valuations through foreign investment, expatriate demand or a narrow segment of ultra-high-net-worth local buyers, rather than the fundamental domestic demand.
This inaccessibility in the sales market has inevitably shifted pressure to the rental sector, creating a precarious dynamic for the residents. The data shows that a one-bedroom apartment in the city centre rents for an average of Rs.131,386 per month—nearly double the average net salary. Even a three-bedroom apartment outside the city centre commands a rental of Rs.112,200. This disparity suggests that for the average worker, independent living in the commercial capital is becoming financially unfeasible, forcing a reliance on shared accommodation or commuting from distant suburbs, where the costs may be lower.
While the overall cost of living index positions Colombo as a value destination for foreign entities earning in stronger currencies, the property investment index paints a contrasting picture of extreme local inflation.
END/DailyMirror/MMP/25012026
