Rental values in key micro-markets across the top seven Indian cities have experienced a remarkable surge of 72% between the end of 2021 and the first half of 2024, according to a recent report by Anarock. This increase in rental prices has significantly outpaced the more moderate growth in capital values, driven by a notable migration trend towards urban centres.

Cities such as Bengaluru, Pune, Kolkata, and Chennai have reported higher increases in rental values compared to the appreciation of capital values. In contrast, the NCR (National Capital Region), MMR (Mumbai Metropolitan Region), and Hyderabad have seen capital values grow at a faster rate than rental values.

Insights from Anarock

Mr. Prashant Thakur, Regional Director and Head of Research at Anarock Group, emphasized that this data is crucial for potential buyers and renters. However, he cautioned that rental and capital value trends are not the sole determinants in deciding whether to buy property or rent. He noted that individuals migrating for job opportunities may not always plan to settle permanently, while others may prioritize investing in property regardless of their long-term intentions.

Factors influencing the decision to buy or rent include:

Financial capacity: Individuals’ ability to make a down payment and afford EMIs.

Job prospects: The stability of employment opportunities in the area.

Life stage: Whether individuals are starting families or seeking long-term stability.

Family size and personal preferences: The need for space and amenities.

For instance, an individual in Bengaluru paying US$ 597.39 (Rs. 50,000) in monthly rent for a 2 BHK apartment valued at US$ 143,369 (Rs. 1.2 crore) might find it more financially viable to purchase the property if they can afford a 20% down payment and secure a home loan at an interest rate of 9.5% over 10 years.

Shift Towards Homeownership

The trend towards homeownership has gained momentum during the pandemic as many individuals sought the security of owning a tangible asset. With current home loan interest rates hovering between 8.75% and 9.5%, an increasing number of tenants are beginning to view rent as a recurring expense, while EMIs are perceived as a form of investment in a stable asset.

As the real estate landscape continues to evolve, understanding these dynamics is vital for both potential buyers and renters navigating the Indian property market.

For further updates on similar issues and investment opportunities, explore the Best IPO to Apply Now - IPO List 2024, Latest IPO, Upcoming IPO, Recent IPO News, Live IPO GMP Today - Finance Saathi and stay informed with the Top News Headlines - Share Market News, Latest IPO News, Business News, Economy News- Finance Saathi.

Join our Trading with CA Abhay Telegram Channel for stock market trading insights and the Finance Saathi Telegram Channel for regular updates on share markets and IPOs.

Start your stock market journey by opening a free demat account with Choice Broking FinX.