India is a land of eclectic real estate that has always been catering to the needs and wants of several prevailing segments of buyers, owners, developers, and investors. In case you and your family are looking to change your house in the near future, the million-dollar question for you would be whether you should buy or rent in the new year of 2022.
A host of factors including the budget, finances, location, locality, infrastructure, connectivity, utilities, facilities, and neighbourhood influence any consumer's home-buying decision. Still, wait and watch and rent-in for the time being is an option that plays in the potential buyer's mind. We attempt to address and answer this million-dollar question for you in the sections to come.
From 2021 to 2022
H1 2021 saw Indian real estate move into a downward slump. Given the severity of the second COVID wave, especially during Q2, all segments of the market including new developments, in-pipeline projects, RTM, rental, and commercial suffered a great deal. While inventory overhang shot up drastically and almost everyone stay put during the times of lockdown and beyond, developers and property owners didn't find many takers to buy or rent their spaces.
Then came Q3 and the story began to change. Inventory overhang started falling, and the common buyer and investor sentiment began to move up. Prices also began to recover from their point of stagnation, and effectively, the entire market began to open up. With Navratri and Diwali festive season coming up, property registrations began to be recorded in handsome numbers and developers felt encouraged to revive stalled projects, as also kick-starting new ones. Indian housing is likely to carry this sentiment well into 2022.
Buy or Rent
The single most important factor to answer your dilemma of buy or rent is your budget and availability of ready finance, followed by the quality of the project you want to invest in. The government has already extended affordable housing options to prospective buyers in most cities of India. Add to that the in-control housing loan interest rates, and you have a case ready to prefer buy-in over rent-in.
Still, this question isn't so easily answered. Even rental rates are much under control across most prominent localities and micro-markets of the country. Yes, you need to do good ground-work spanning at least one year before arriving at your final decision. To an extent, buy or rent is a question the answer to which varies across context and situation. What this means is, the answer can be buy for one family and rent for another. How the variable-mix plays in your specific case is important to consider.
At a macro-level, buy is the analysed answer because property prices are only expected to move north here over the long term. Rent can be considered almost anytime; however, 2022 presents a golden opportunity for home-buyers to secure a quality home at a price that would make them smile, and that too without cutting deep into the pockets of your project developer.
It's still advisable that you do your due diligence well before giving your nod to the project and the home of your choice. In case you have good finance available with you, a higher percentage of a down payment is recommended to avoid carrying the hassles of repaying your home loan well into the long term. A home purchase doesn't happen more than 2 or 3 times for most buyers in India, after all. For example, if you have INR 50 L available with you for a house of your choice priced at INR 1 crore all inclusive, you have two options. First, exercise 50% down-payment option along with a loan for the rest 50% of the amount. Alternatively, to play safer, go for an affordable housing option that you can afford completely with your ready finance.
The point is, with ready finance, time is ripe to buy-in rather than rent-in. It would save you from the discomfort of managing your hefty home loan over a time-frame of 10, 15, or 20 years. You can then think of spending your savings and income on other important aspects of your life, such as marriage, education, healthcare, travel, and more. Of course, without ready finance, you would do better to defer your home-buying decision and rent-in till the time you build a budget of the order of what your dream home costs. This level of prudence is essential for any smart and serious prospective home-buyer in India.
Author Siddharth Maurya is a Resource Specialist - Real Estate and Fund Management