Are the sky-rocketing property prices forcing you to stay in a Rental property? Read the latest MBRI report to know more
A property seeker in India is always confused between opting for a rented accommodation or giving that rental amount as EMI for buying a house. In the absence of a robust and reliable tool, these decisions were traditionally taken with gut feel or with the guidance of a close relative or a friend, leaving a 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 & data analysis.
How to interpret MBRI Data:
MBRI of 1-20:This denotes that it is much less expensive to buy a home than to stay on rental, in these cities / sub-cities. Property seekers looking at investing here are advised to buy a property than staying on rentals.
MBRI of 21-25:This denotes that it is relatively more expensive to buy a home than to stay on rental, in these cities / sub-cities. This is a neutral range and property seekers looking at investing here are advised to take the final decision based on their financial situation.
MBRI of 25+:This denotes that it is much more expensive to buy a home than to stay on rental, in these cities / sub-cities. Property seekers looking at investing here are advised to rent a property rather than buying.
Makaan.com Buy vs. Rent Index (MBRI) for top Indian cities / areas (Arp-June 2013 to Arp-June 2014)
The MBRI for period Arp to June 2014 highlights the fact that most of the Indian cities property prices have skyrocketed making them fall in the rent category. The national MBRI data for AMJ 2014 is 32 this data shows that renting is preferred over buying and speculating. On analyzing the MBRI for AMJ 2014 for 31 sub-cities in India (see table), it was observed that cities like Mumbai, Pune, Delhi, Chennai, and Ahmedabad are preferred for renting whereas only Bangalore and Hyderabad were 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 2013. In 2013, out of the 31 sub-cities, 12 were either in buying or neutral category, which has reduced to only five in 2014. The report indicates that high property prices have made renting more preferable than buying. Read further to know more regarding MBRI changes on a city basis.
MBRI analysis for Mumbai:
The MBRI index for the city of Mumbai has moved from 31(Rent) to 36(Rent) April-June’13 to April-June’14 respectively. This makes the overall city more conducive for renting. This shift in MBRI can be attributed to hardening of overall property prices which makes buying of property difficult. This phenomenon can also be attributed to stable rental rates in the city.
According to the report, all the sub-cities of Mumbai i.e. Mumbai Andheri-Dahisar(34), Mumbai Beyond Thane(39), Mumbai Harbour(37), Mumbai Mira Road And Beyond (32), Mumbai Navi (35), Mumbai South (37), Mumbai South West (34), Mumbai Thane (38) are recommended for renting over buying. These sub-cities have an MBRI value of 25+ indicating that in these cities it is much more expensive to buy a home than to stay on rental.
MBRI analysis for Delhi NCR:
The MBRI for the city of Delhi NCR has marginally come down from 38 in April-June’13 to 34 in April-June 14 period. The capital city of India hence remains in the rental range. The reduction in MBRI index can be attributed to decrease in property prices in the city and/ or rise in rentals. Within the main Delhi city, all areas including Delhi East(41), Delhi North (30), Delhi South (28), Delhi West(37), Dwarka (57), Faridabad (32), Ghaziabad (31), Greater Noida (32) and Gurgaon (33) are in the rental range which means that it is far more expensive to buy a property in these areas than to stay on rental. Only Noida (23)is in the neutral range, this means one can buy or rent a flat depending on the financial condition.
MBRI analysis for Bangalore:
The index for the city of Bangalore lies in the Neutral range but the MBRI moved up from 21 to 25 from April-June’13 to April-June’14 respectively. This small shift in MBRI can be attributed to a marginal increase overall property prices which makes investing in a property a bit more difficult. Overall the city remains to be a diverse destination as Bangalore Central(32) and Bangalore North(26) come in the rental category and Bangalore East(22) and Bangalore South(23) fall in the neutral category whereas Bangalore West (20) lies in the buy range.
MBRI analysis for Chennai:
The index for the city of Chennai has increased drastically from from 26 to 33 for April-June period in 2013 and 2014 respectively. The city of Chennai hence remains in the rental range. This huge jump in MBRI can be attributed to hardening of property prices and / or softening of rentals. Property seekers in Chennai North(35) and Chennai South(31) are advised to take a on rent as the data signifies that it is far more economical to rent a property here.
MBRI analysis for Hyderabad:
The index for the city of Hyderabad has dropped marginally from 25 in April-June’13 to 21 in the April-June’14 period. The sub-cities of Hyderabad hence lie either in rental or in the buy range. This marginal drop in MBRI can be attributed to softening of property prices and / or hardening of rentals. Property seekers in sub city Hyderabad (27) should take a property on rent whereas investors in Secunderabad are advised to buy a property rather than staying on rental. The sub city Secunderabad(15) offers affordable housing.
MBRI analysis for Pune:
The data for the city of Pune shows that the city has moved from being a neutral destination (25) in April-June’13 to renting destination (33) in April-June’14 period. The increasing property prices in Pune has made renting a property more preferable and economical.
MBRI analysis for Ahmedabad:
The index for the city of Ahmedabad has remained stable at 34 over the last year. In the city investors are recommended to go for renting rather than buying properties. All the sub cities of Ahmedabad - Ahmedabad West(29), Ahmedabad East(30), Ahmedabad North(42) fall in the rental category, this can be due to increase in property prices in the city or stability in rental rates.