More than a year of coronavirus pandemic and the accompanying lockdown restrictions and work-from-home situation for many office-goers highlighted the need for owning a residential property like never before. But, it is not an easy decision to buy a house as most buyers face that perennial dilemma of renting vs buying.
Dwellers especially those living in urban and suburban areas remain puzzled as they have to consider various factors ranging from the cost of the property against rent and workplace distance et al. Be that as it may, the primary determinant in such decisions remains an individual’s budget.
Ashish Jain, Managing Director at Star Housing Finance Ltd said that in a country like India, owning a property is both a financial as well as an emotional decision and most often involves the entire family.
“So, while renting may seem to be a prudent decision in the short term, homeownership is still a major goal for the majority of the population,” Jain told CNBC-TV18.com.
While sharing more insights, Jain said that the average rental yields in India, one of the lowest, have mostly remained around 3 percent; residential real estate has a return of an average 11.6 percent over the past 10 year period, according to RBIs House Price Index.
He added that buying a home always ensures asset creation (ownership) for the buyer along with a significant return over the long term which is not possible from a rented property.
However, he stressed that one’s finances should only be the sole consideration here.
If we see before 2020, young, salaried home-seekers typically opted for rental properties because they were disinclined to make a big-ticket investment that would restrict them from settling in different locations. However, the pandemic has ironically made people realise the importance of owning a home as it offers security unmatched by other assets, said Saurabh Garg, Co-Founder and CBO at NoBroker.com.
Further, talking about the post-pandemic landscape, Garg said that the expenditures of individuals have been limited to the bare essentials. As a result, their savings have flourished, leaving them better equipped to make a down payment for a home purchase.
For the last 4-5 years, he said that prices have been quite stable and ever since the pandemic broke, low interest rates, reduction of stamp duty (in a few states), and builder discounts have made home-buying even more affordable.
"These benefits have made homeownership more preferable in the eyes of property seekers as, at the end of the day, they will have a tangible asset in their possession, something that is not possible through renting a house. Moreover, the remote work culture has also ruled out the need to own a home near offices and main city centers. This has allowed prospective homeowners to aspire for and purchase bigger, better homes – a trend that is likely to continue in 2022 as well," he added.
New-age homebuyers mostly millennials in India today have many options to choose from whether they want to purchase a spacious home at affordable price points in the suburbs or rent an apartment in a gated society in a neighbourhood of their choice.
Above all, the present scenario offers the most opportune time for home-seekers to finally make that commitment and turn thought into action by taking a firm step towards realizing their dream of owning a home, Garg told CNBC-TV18.
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First Published: IST