No city where buying a property is advisable over renting: Makaan.com

Has your sub-city moved from buying to renting zone within 3 years? Check out the latest Makaan.com Buy vs. Rent Index (MBRI)

May 05, 2014 3:54 IST | India Infoline News Service
What has been the change in the property market within the last 2-3 years?” asks Raghu Yadav. He continues, “I keep following the appreciation/ depreciation/stabilization in the property prices on a quarterly basis, but what impact does it have on me? Do these minor fluctuations bring about any change? I feel that the property prices have remained almost the same for the past 2-3 years.” Do you also feel the same? Let us see what have been the changes in the past 3 years and how have these changes impacted your city area or locality.

Everyone has an opinion on whether it is better to rent or buy a home in the prevailing market conditions. Often these opinions are based on personal circumstances and often what is better for one person may not be the best solution for someone else. As the property market does not see changes at a rapid pace, the latest Makaan.com Buy vs. Rent Index (MBRI) works out a comparison between the changes that happened from JFM 2012 to JFM 2014. What comes out clearly according to the report is that the key Indian cities, including Mumbai, Delhi, Bangalore, Ahmedabad, Pune and Chennai have seen a significant shift in sentiment towards renting in the past three years; another fact highlighted is that although the rental property prices in these cities seem attractive and affordable at present, it is not that they have always remained outside the reach of the common man. Let’s retrace the index from 2012 onwards:

A comparison between the MBRI from Jan-Mar 2012 to MBRI for Jan-Mar 2014 shows that within three years, key real estate markets have moved from being a place for buying and investing ranking to renting.

Makaan.com Buy vs. Rent Index (MBRI) for top Indian cities / areas (Jan-Mar 2012 to Jan-Mar 2014)

The national MBRI data for JFM 2014 reflects that renting is preferred over buying and speculating. Overall a lower MBRI (under or equal to 20) indicates a preference for Buying vs. Renting and a higher MBRI (over 25) indicates a preference for Renting over Buying. MBRI of 21 to 25 is a Neutral zone where the person can take a decision based on his liquidity position. On analyzing the MBRI for JFM 2014 for 31 sub-cities in India (see table), it can be observed that cities like Mumbai, Pune, Delhi, Chennai, Bangalore and Ahmedabad are preferred for Renting whereas only Hyderabad is in the Neutral zone. In fact there is no city in India where buying a property is advisable over renting. However, we must clarify that there would be pockets within these cities where Buying would make more sense due to local dynamics. It is interesting to compare the 2014 data with the index for 2012 and 2013. In 2012, out of the 31 sub-cities, 12 were either in buying or neutral category, which lowered to 10 in 2013 and further dropped to only 7 in 2014. Read further to know more regarding MBRI changes on a city basis 

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