From Renting to Ownership – Navigating the Housing Market Shift in India

The Indian housing market has undergone a massive shift, especially in the post-pandemic period. The consumers who were commonly labelled as the ‘generation rent’ are now giving preference to home ownership over renting due to the social security benefits that this asset class offers.

A report released in December 2023 by real estate property website, NoBroker, revealed that 65 percent of Indians are inclined to purchase a home in 2024, as the gap between rents and EMIs continues to narrow. Among those surveyed, 41 percent also stated that the current market scenario presents favourable environment to buy instead of renting a property.

The Big Shift

At 16 percent, the YoY rise in rents has been at its peak across 13 major Indian cities. Greater Noida, Gurugram, Bengaluru, and Hyderabad are experiencing significant spikes with 32.1 percent, 24.5 percent, 23.7 percent, and 22.9 percent rental surge, according to Magicbricks. What was once a comforting constant in the pandemic period has now altered into a source of financial and mental stress for young Indians.

Given the sudden rent crisis and deposit hikes, especially across key metropolitan cities, Indian consumers are gravitating towards a more sustainable, practical, and long-term option – home ownership.

Identifying the Forces of Change

·???????? The allure of homeownership: Buying a home, or rather any property, is not just a financial decision but an emotional journey. The inherent sense of stability, security, and permanence, as opposed to the fleeting nature of rental properties, has increasingly prodded consumers to explore the prospect owning a home. Furthermore underscoring this shift in preference is the freedom to upgrade and modify one’s property as per personal needs, which is often restricted in a rented home.

·???????? Affordability: The report by NoBroker highlighted home affordability as another factor propelling consumers to opt for home ownership. 27 percent people out of the 32,000 surveyed opined that they want to purchase a home because their income allows them to. Another 23 percent pointed security as the reason for giving preference to owning a physical asset. Many individuals also consider home ownership as a symbol of achievements, aligning with their changing lifestyles and aspirations.

·???????? Appreciation potential and wealth creation: With property prices in metro cities continuing to surge swiftly, many consumers are noticing a potential for capital appreciation, higher rental income, and wealth creation. Also, the fact that appreciation in property value far outpaces other asset classes and offers a predictable ROI when compared to other investment avenues, has made purchasing a property a viable decision than renting one.

Along with these factors, the availability of spacious homes, access to housing finance, attractive offers and deals on projects from developers, and tax incentives are bolstering the aspirations of prospective homebuyers and contributing to the shift in the real estate industry from renting to purchasing.