Many people often wonder whether to buy a home or rent one. This decision largely depends on individuals, cities, incomes, and various circumstances. In cities like Bengaluru, Pune, Kolkata, and Chennai, average rental values have significantly increased compared to capital values. In contrast, in cities like Delhi, Mumbai, and Hyderabad, capital values are higher than rental values.
According to leading analytics firm Anarock, from the end of 2021 to the first half of 2024, average rental rates in Bengaluru, Pune, Kolkata, and Chennai have surpassed capital values. Conversely, in Delhi, Mumbai, and Hyderabad, the scenario is different, with capital values rising substantially compared to rental rates. Overall, across seven major cities in the country, rental values in micro markets have increased by 72%, while capital values have shown slower growth.
In Bengaluru’s Sarjapur Road, average monthly rental values have increased by 67%, while capital values rose by 54%. On Thanisandra Main Road, rental values went up by 56%, with capital values increasing by 52%. In Pune’s Hinjewadi, rental values increased by 52%, while capital values rose by only 31%. In Kolkata’s EM Bypass, rental values grew by 46%, but capital values only increased by 15%.
In Chennai’s Pallavaram, rental values saw a 40% growth, whereas capital values rose by just 18%. In Delhi, rental values on Sohna Road increased by 40%, while capital values went up by 54%. In Noida’s Sector 150, rental values grew by 56%, with capital values skyrocketing by 126%.
In Mumbai’s Chembur, rental growth was at 38%, with capital values increasing by 39%. In Hyderabad, capital values also saw significant increases. In Hitech City, rental values grew by 46%, while capital values increased by 59%. In Gachibowli, rental values rose by 50%, and capital values increased by 70%.
Rental and capital value increases vary significantly across different locations. This leads to common questions about whether it’s better to buy a home or to continue renting. Factors such as financial resources, job growth opportunities, life stage, family size, and personal preferences play crucial roles in this decision.
For instance, consider an individual in Bengaluru with a stable job paying Rs 50,000 per month for a 2 BHK apartment valued at Rs 1.2 crore. This person may wonder whether renting is more advantageous than buying. If they continue to rent, they will spend Rs 6 lakh annually on rent. Assuming a 7% annual increase over the next 10 years, the total rent paid would amount to Rs 83 lakh, which represents 69% of the property’s cost, with no investment value — only an expense.
On the other hand, if this individual decides to buy the property by taking a loan, paying 20% as a down payment and financing the remaining amount at a 9.5% interest rate over 10 years, it would likely be beneficial, according to Prashant Thakur, Region Director and Head of Research at Anarock Group. He pointed out that instead of spending a substantial amount on rent, paying monthly EMIs could lead to ownership of the property in ten years. Considering the low interest rates, rising capital values, and tax benefits on home loans, this option could yield additional advantages.
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