Mahendra Sandanshiv, a resident of Belapur, Navi Mumbai has been looking for a house for the last one year.
The ever-increasing rate of interest on home loans, higher costs of living, and exorbitant property prices are driving people, who were contemplating to buy houses, to now opt for renting them instead.
Mahendra Sandanshiv, a resident of Belapur, Navi Mumbai has been looking for a house for the last one year.
“The property rates have skyrocketed to the extent that I can’t afford a house anymore. My income increased in the last one year, but the cost of living in the city has gone up too,” he said.
“Developers are asking for almost 30 per cent of a flat’s entire cost in cash,” he added.
Sandanshiv was planning to spend the amount, which he was earlier spending on paying the rent, on EMIs.
“However, there’s a huge gap between the monthly EMI amount and rent. The better option right now is to wait for a correction in property prices,” he added.
Pankaj Kapoor, the chief executive of Liases and Foras, a real estate research firm, said it is very logical and practical to stay in rented houses. In Kharghar, in Sector 35, a 2BHK flat costs Rs60 lakh.
“For this house, the buyer has to pay Rs60,000 as EMI. But the same buyer can get the same house on rent for Rs6,000. As a result, people prefer rented houses at present,” he said.
Kapoor continues, “If someone does buy a house, there will be no appreciation in cost in future because developers have hiked property rates keeping the next 3 to 5 years in mind. So buyers will get only a marginal capital benefit. Most flats bought for investment purposes are lying empty, hence rent costs are low,” Kapoor added.
Since 2009, developers had increased property rates by almost 40%. Many home buyers are now playing the waiting game, anticipating a correction in the market.
Plus, home loans aren’t easily available. “Interest rates have gone up drastically. Till a year ago, buyers were getting a home loan at an interest rate of 8% from any nationalised bank. Now, the interest has gone up to almost 10-11%, which may go up further following the increase in key policy rates by RBI,” said a real estate expert.
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