If you are an Indian, it's a given that you will buy a house. Living on rent is mostly considered infra dig, paying rent is perceived a waste of money. If it isn't a compulsion you derive from your DNA, there are enough number of family members and well-wishers to hammer it into you.
Buying a house would be an ideal move in most cases, but in the current context, it may be better to rent. In the past decade, property prices have shot up dramatically and rental values have not kept pace. In a recent survey by ICICI Direct across Indian cities, 37.3 per cent of the respondents said there had been no increase in their rents in the past year.
Another 27.2 per cent reported less than 5 per cent increase, while 25.5 per cent had to pay only 5-10 per cent more. The tardy rise in rental values means that instead of tying down a huge amount to buy a house, you can rent one for just a fraction of this sum. Even in the most populous urban pockets, the monthly rent is less than 0.3 per cent of the price of the property.
For instance, a loan of Rs 40 lakh for 15 years at 10 per cent would require an EMI of Rs 43,000. But the same property can be taken on rent for about Rs 12,000 a month, a saving of Rs 31,000.
Apart from cities like Mumbai, where very little land is available, investment in real estate is leading to a huge growth in housing capacity. This is expected to keep rents in check. Another factor in favour of renting is the improving affordability levels.
|"Staying on rent means you lock up a much smaller part of your funds. This implies that you can invest the surplus amount and make your money grow."|
Joint MD, Capital Markets, Jones Lang LaSalle Meghraj
|Contrarian Investing is the best strategy|
|1.||Swim against the tide|
|2.||Pick stocks that MFs are buying?|
|3.||Are cheap stocks good investments?|
|4.||Are stocks better than FDs?|
|5.||Can you lose money in debt funds?|
|6.||Is online trading cheaper?|
|7.||Should you invest in equities?|
|8.||How online plans benefit buyers|
|9.||Should you let term plan lapse?|
|10.||Is gold a good investment?|
|11.||Is renting a house cost-effective?|
|12.||Follow rules of investing?|