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Tough To Buy A House, Tougher To Rent One
Posted by Pradeep Sadanapalli | June 27, 2008 | 580 views
(4 votes, average: 4.5 out of 5)
Loading ...Realty prices might be showing signs of easing, yet it’s tough to buy a house. Prices are still high and loans are getting expensive. And if you thought renting a property is an option, well, it’s getting dearer too.
According to analysts and developers residential rentals are hardening, registering a 10% growth. The demand for rented residential space is high as India has very low residential rental yields hovering around 3-6% (that is, given the high prices, people prefer to live on rent rather than buy a property). At the same time home loan interest rates are around 11% to 13%. Not surprisingly while new property sales are slowing down, rentals are showing an upward trend.
Many prospective home buyers are deferring purchase, expecting a dip in prices, and looking at renting accommodation in the short run. “People are nervous about spending the capital they have in times of uncertainty. Therefore renting remains the only option. Though India is also unique as lot of people prefer to park money in residential projects and lock up apartments, which reduces the supply of apartments for rent, putting an upward pressure,” says Abhilash Lal, director, consulting and research, DTZ, a global real estate advisory.
Agreeing with the fact that lower residential yields have made renting a feasible option for many, wholetime director of Ansal Housing and Construction, Kushagr Ansal points out, “Real estate yields in India are very low, pegged at 4-6%. This makes renting a lucrative option.”
Though new supply is being added to the pool of residential properties, it hasn’t really helped in stabilising rents. Says COO of Parsvnath Developers, Dr B P Dhaka, “New supply is not coming in the preferred centrally located residential areas. Also maintenance and construction costs have gone up in the last one year. All this has contributed to higher rentals.”
Developers also feel that residential rentals will not be impacted in the short run. “Demand hasn’t really waned for quality houses and the market is still buoyant. Till the time the job market is healthy and disposable incomes don’t go down drastically, rentals will keep moving up. Though the rentals will plateau out in the long run,” says Kunal Banerji, VP-marketing, Ansal API.
However, executive director of Omaxe Vipin Agarwal points out, “Since residential rentals and lease are long term arrangements, there has not been a significant increase in rentals in last 6-8 months (for people already living in rented properties).’’
SOURCES:
Economic Times
Topics: Property Matters, Dream Home |
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