To Rent or To Buy: Understanding the Changing Dynamics of Indian Real Estate
Average rental values have surpassed capital values in Bengaluru, Pune, Kolkata, and Chennai, while NCR, MMR, and Hyderabad saw the opposite trend.
Rent Vs BuyIndian Real EstateAnarockHome Loan Interest RatesTax BenefitsReal Estate PuneSep 18, 2024
In Bengaluru, the average monthly rental values in Sarjapur Road increased by 67%, while capital values rose by 54%. Similarly, in Pune's Hinjewadi, rental values appreciated by 52%, while capital values rose by just 31%. Kolkata's EM Bypass saw a 46% increase in rental values, while capital values grew by only 15%.
On the other hand, cities like NCR, MMR, and Hyderabad witnessed the opposite trend, with capital values appreciating more than rental values. In NCR's Sohna Road, rental values rose by 40%, while capital values jumped by 54%. Hyderabad's HITECH City and Gachibowli also saw capital appreciation outpace rental values.
So, should you rent or buy a property? The decision depends on various factors, including financial wherewithal, job growth prospects, stage of life, size of family, and personal preferences. For instance, an individual in Bengaluru with a stable job who is paying a monthly rent of ₹50,000 for a standard 2 BHK worth ₹1.2 crore may grapple with the rent or buy dilemma.
If the individual decides to stay on rent, the total rental outgo over 10 years, including a 7% annual rental escalation, would be approximately ₹83 lakh, which is almost 69% of the total cost of the property. On the other hand, if the individual opts to buy the property via a home loan, they can pay monthly EMIs and ultimately own the physical asset after a 10-year period.
In today's market, relatively cheaper home loan interest rates, averaging between 8.75% and 9.5%, make buying a more attractive option. Additionally, homebuyers can avail of various tax benefits, including deductions on principal repayment, stamp duty, and registration charges.
Ultimately, the decision to rent or buy a property depends on individual circumstances and priorities. It's essential to consider personal preferences, financial situation, and market performance before making a decision.
Frequently Asked Questions
Which cities saw rental values rise more than capital values?
Bengaluru, Pune, Kolkata, and Chennai
Which cities saw capital values appreciate more than rental values?
NCR, MMR, and Hyderabad
What are the factors that drive the rent or buy decision?
Financial wherewithal, job growth prospects, stage of life, size of family, and personal preferences
What are the tax benefits available to homebuyers?
Deductions on principal repayment, stamp duty, and registration charges, and additional tax benefits for women
What is the current range of home loan interest rates in India?
8.75% to 9.5%
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