Rental rates to go up after demonetisation
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% during the same period. And in the backdrop of demonetisation of ` 500 and ` 1000 notes, rental rates are expected to increase over the next 12 to 18 months, says a report titled Buy vs Rent report by financial management consultants ArthaYantra Corporation.
“At ArthaYantra, we expect to see a correction in real estate prices over the next six to 12 months. Customers would hold on to their buying decisions during this period. As a result, we expect to see upward pricing pressure on rentals as customers would focus on renting out and wait to make a purchase decision,” says Nitin Vyakaranam, CEO.
The earlier editions of the report covered only eight markets that included Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune. In the latest edition, four new cities have been added. These include Indore, Kochi, Jaipur and Lucknow.
The four cities included this year 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.
Delhi-NCR is the second most expensive city to buy or rent a property, says the report. The Capital has seen capital prices decrease by about 22% over the last four years, while the average rental values have increased by 10.79% during the same period.
Mumbai is the most expensive city for both buying and renting residential property. Though capital prices have dropped by 0.42% compared to last year, it is still beyond the reach of a middle income households. Therefore, it is the most suitable city for renting a house.
Bengaluru leads in renting options, which has pushed rental values down by 2.11% compared to last year. Capital rates are up by 4.35%.