India is an eclectic real estate land that has always met the needs and wants of several dominant segments of buyers, owners, developers and investors. If you and your family are planning to move homes in the near future, the million dollar question for you would be whether you should buy or rent in the new year 2022.
A multitude of factors including budget, finances, location, locality, infrastructure, connectivity, utilities, facilities, and neighborhood influence any consumer’s home buying decision. Still, waiting and watching and renting for the moment is an option that plays in the mind of a potential buyer. We try to address and answer this million dollar question for you in the sections to come.
From 2021 to 2022
The first half of 2021 saw Indian real estate collapse. Considering the severity of the second wave of COVID, especially during the second quarter, all segments of the market including new developments, ongoing projects, RTMs, rental and commercial have suffered greatly. As excess inventory has grown dramatically and almost everyone stays put during lockdown periods and beyond, developers and owners have not found many tenants to buy or lease their spaces.
Then came the third trimester and the story started to change. The inventory surplus began to decline and the common sentiment of buyers and investors began to rise. Prices also started to recover from their stagnation point, and indeed, the whole market started to open up. As the Navratri and Diwali holidays approached, property registrations began to be recorded in large numbers and developers felt encouraged to revive stalled projects, as well as to launch new ones. Indian housing is likely to carry this sentiment through 2022.
Buy or Rent
The most important factor in answering your buying or leasing dilemma is your budget and the availability of loan finance, followed by the quality of the project you want to invest in. The government has already extended affordable housing options to potential buyers in most cities in India. Add to that the interest rates on home loans under control, and you have a record ready to prefer buyout over lease.
Yet this question is not so easy to answer. Even the rental rates are well under control in the most important towns and micro-markets of the country. Yes, you need to do a good groundwork spanning at least a year before you make your final decision. To some extent, buying or renting is a question and the answer will vary depending on the context and the situation. This means that the answer can be buy for one family and rent for another. It is important to take into account how the variable mixture plays out in your specific case.
At the macro level, buying is the answer analyzed because property prices here are only likely to move north in the long term. Rent can be considered almost at any time; However, 2022 presents a golden opportunity for homebuyers to secure a quality home at a price that would make them smile, and that too without sapping too much in the pockets of your project developer.
It is still advisable to do your due diligence before giving the green light to the project and the house of your choice. If you have good financing, a higher percentage of down payment is recommended to avoid the hassle of paying off your mortgage in the long term. A home purchase doesn’t happen more than 2-3 times for most buyers in India after all. For example, if you have 50 L INR available with you for a house of your choice at the cost of 1 crore INR all inclusive, you have two options. First, exercise the 50% down payment option with a loan for the remaining 50% of the amount. Alternatively, to play it safe, go for an affordable housing option that you can afford entirely with your loan financing.
The point is, with loan financing, now is the time to buy rather than lease. This would save you the discomfort of managing your heavy home loan over a period of 10, 15 or 20 years. You can then think about spending your savings and income on other important aspects of your life, such as marriage, education, health care, travel, etc. Of course, without loan financing, you are better off putting off your buying and leasing decision until you budget in the range of what your dream home costs. This level of caution is essential for any smart and serious potential buyer in India.
Author Siddharth Maurya is a Resource Specialist – Real Estate and Fund Management
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