With lower EMIs, should you buy or rent a house?

With the new year ushering in cheaper home loans, we study the ArthaYantra Buy Vs Rent Report 2017 that looks at 12 cities across India to map where buying is affordable and where living on rent is more cost-effective

What you should do if you are in;

Bengaluru
Though property prices and rents have fallen, it makes more sense to rent for households with annual incomes of upto Rs 12 lakh.

Chennai
It is the third most expensive city to buy a house in. For those with an annual income of up to Rs 16 lakh, renting is recommended.

Delhi-NCR
The second most expensive location to buy or rent a house. Renting is recommended for households with an annual income of upto Rs 16 lakh.

Hyderabad
If you consider the EMI vs. rent ratio, it is the best destination for buying a house in.

Mumbai
The costliest city to buy or rent. Renting recommended for those earning up to Rs 25 lakh per annum.

Kolkata
An affordable city to rent or buy in. Those with an annual income over Rs 15 lakh can buy a house.

Pune
Prices are comparable to those of Bangalore. Households with an annual income of up to Rs 14 lakh should rent a house.

Ahmedabad
An affordable property market. Those earning less than Rs 8 lakh a year should rent.

Indore
The most affordable city to buy or rent a house in. Anyone earning more than Rs 8 lakh a year can afford to buy a house.

Kochi
Costliest among the new entries. Households with income of up to Rs 8 lakh should choose to rent a house instead of buying.

Lucknow
As rents are low, those earning less than Rs 8 lakh a year should take homes on rent.

Jaipur
Another city with low rents. Households earning up to Rs 8 lakh a year would be better off renting a house.

Assumptions
1. Sale price and rentals are for a ready-to-occupy 1,000 sq ft property.
2. Baseline gross annual income considered is Rs 8 lakh.
3. 20% of the cost of the house is considered down payment.
4. Home loan tenure considered is 15 years, at an interest rate of 9.25% per annum.
5. Average savings to buy a home is considered 25% of one’s annual income.
6. 50% of monthly take home salary is considered as EMI payable.
7. 1.5% of the property value is payable as property tax.
8. Rental security deposit varies city to city.

Credits ET Realty

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