Buying A Property Vs Renting: This Index Will Help You Decide
Buy a property or stay on rent? This is a question every home seeker asks himself. These decisions are largely taken based on personal choice or with guidance of a close relative/friend. Thus, leaving scope for error. Makaan.com brings to you a robust and reliable tool – Makaan.com Buy Vs Rent Index (MBRI) that helps answer the questions based on research and data analysis. Before you have a look at the MBRI, it is important to understand its interpretation.
How to interpret MBRI?
MBRI of 1-20: Buying a home is much affordable than to rent out a property in cities/sub-cities rated under this category.
MBRI of 21-25: It is relatively more expensive to buy a home than to stay on rent in cities/sub-cities under this category.
MBRI of 25+: Buying property in cities/sub-cities under this category are highly expensive when compared to taking a property on rent.
How is it calculated?
Coverage: Each city is divided into sub-cities (micro-markets) and micro-markets into localities. Property prices are obtained across micro-markets through listings on makaan.com as well as makaan.com's nationwide sales force.
Database: The current index comes from 32 micro-markets across major cities in India. The index is based on minimum database size of 20,000 data points every month.
New & resale properties: The MBRI database includes a good representation of new as well as resale properties. Most reports on the property sector today are based on new developments, whereas in reality, new properties are relatively a smaller percentage of the supply, while resale is the major part.
Index algorithm - The index is calculated quarter-on-quarter for all the major cities and sub-cities in India. It is a derived index using an advanced algorithm which factors in the average value of properties available for sale and rent.
Selection of cities for MBRI
Coverage: The MBRI covers Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune. Other cities may be added in subsequent issues. These cities account for over 80 per cent of the Indian Real Estate market.
Factors that have been taken into consideration while selecting the cities:
Population: The real estate sector is dependent on the demand for houses, which in turn is dependent on the population. Populous and ever growing urban agglomerates like Mumbai and NCR have an ever growing demand for housing.
Economic importance: Cities which are hubs of certain industries have constant influx immigrants from across the country, which also creates a strong demand for housing – beyond the needs of the resident populations. Hence, such cities have also been included.