ArthaYantra Corporation released the 5th edition of its annual Buy vs Report (ABRS). This report which used to cover 8 top cities has added 4 cities this year, increasing the coverage to a total of 12 cities in India.
To buy or to rent a residential property is a question that troubles millions of families in India. ArthaYantra Buy vs. Rent Score (ABRS) creates a scientific and objective method for families to arrive at answering their Buying v/s Renting question from a personal finance perspective. With the backdrop of demonetization and its impact on Real Estate, Buy vs. Rent decision could be one of the most important personal finance decision to be made over the next 12-18 months.
ArthaYantra developed a patented composite score “ArthaYantra Buy vs. Rent Score” (ABRS)™ to quantify the Buy v/s Rent decision and also explains the reason to buy or rent in a particular city. It uses a host of parameters including salaries, savings, tax and prices to arrive at a recommendation. ABRS addresses the important questions including how much a professional should spend for buying a home, and at what income can a professional comfortably take a decision to buy a house as against renting.
Overall, the average price of a house in the main cities across India has increased by 3.6% compared to last year while rental values have grown at a faster rate of 4.9% for the same period. This trend is expected to continue and rentals would see a greater increase.
Commenting on this edition of the ABRS Nitin Vyakaranam, CEO of ArthaYantra says: “At ArthaYantra, we expect to see a correction in the price of Real estate over the next 6 to 12 months. Customers would hold on to their buying decisions for this period. As a result, we expect to see upwards pricing pressure on Rental properties as customers would look to rent out for a bit more time and wait it out.”
The previous editions of ABRS covered the real estate buy and rental markets of 8 cities. Namely, the Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune. In the latest edition 4 new cities of interest have been added- Indore, Kochi, Jaipur and Lucknow.
The 4 cities added in this edition were found to be more affordable for buying or renting a house. However, Hyderabad and Ahmedabad were found to be just as affordable. Mumbai continues to be the most expensive city for buying or renting a house followed by Delhi.
City Specific Findings:
- Continues to be the most affordable metro and the second most affordable city overall for both buying and renting. It is second only to Indore in terms of home prices or rents.
- Rents have seen an increase of 21.75% over the last 4 years while residential property prices have dropped by 3.35% over the same period.
- Anyone with an annual income of over INR 8 lakhs can consider buying a residential property here
- Most expensive city for both buying and renting a residential property.
- Though the home prices dropped by 0.42% compared to last year, it is still beyond the reach of a middle income household.
- Even someone with an annual income of INR 25 lakhs cannot afford to buy a residential property. Therefore, it is most suitable city for renting a house.
- Delhi-NCR is the second most expensive city to buy or rent a residential property
- The capital city has seen buying prices decrease by about 22% over the last 4 years, while average rental values have increased by 10.79% for the same period
- Buying a property here is only suitable for people with an annual income of INR 22 lakhs
- A buoyant growth in the city’s job market is leading to an increase an expansion in the number of localities for renting in turn driving down the rental values.
- Rents dropped by 2.11% compared to last year, however the property prices are up by 4.35%
- The garden city is an affordable buy destination for people with an annual income of over
- Kolkata’s property prices have appreciated by 10.8% over the last 5 years.
- Over the last year, property prices grew by 2.34% while rental values fell by5.53%.
- People with an annual income INR 16 lakhs can buy a house in the city of joy.
- Chennai has witnessed an increase by 9.10% as compared to last year, Chennai continues to be the 3rdmost expensive city to buy a residential property
- Rental values have risen by 3.83% compared to last year.The rents are however still attractive making this city favorable for renting
- Buying a property here is only suitable for people with an annual income of over INR 22 lakhs
- Pune has been in demand for both buying and renting a residential property.
- Along with Mumbai, Pune has seen a good growth in property prices over the past 5 years.
- People with an annual income of above INR 18 lakhs can consider buying a residential property.
- Ahmedabad continues to be an affordable city for both buying and renting a residential property.
- The real estate market is more or less flat by making this city affordable for buying a property.
- People with an annual income of INR 10 lakhs and above can consider buying a residential property in this city.
In addition to the 8 metros, 4 cities were added to this edition of ABRS
- The twin cities of Kochi-Ernakulam is one of the more has seen investments in IT and through NRI remittances
- The average property price and Rental value of Kochi are the highest among the 4 cities added this year.
- People with an annual income of INR 13 lakhs and above can consider buying a residential property in this city.
- Lucknow’s rents are the second most affordable across all cities studied this year only behind Indore.
- People with an annual income of 11 LPA or more can consider buying a house over renting
- Indore has emerged as the most affordable city in the cities studied this year.
- Indore’s buy vs. rent rank is second only to Hyderabad
- People with an income of INR 9 LPA and above can afford to buy a house.
- Jaipur’s investments in infrastructure and IT have put it among the investment destinations of interest
- Jaipur’s rental rates are the second highest among the cities added to the study this year. However, Jaipur’s rental rates are among the lowest nationally.
- People with an income of over 11 LPA can afford to buy a house.
Nitin B. Vyakaranam, CEO AthaYantra, adds, “Buying a home without clear economic beneﬁts can be detrimental to the ﬁnancial well-being of the buyer. We recommend that ABRS should be used as the mainstay tool to arrive at a more objective decision on whether to buy or rent a property”.