Better to rent a flat than buy one in Mumbai

Skyrocketing prices have forced people in the city and the extended suburbs to stay on rent instead of buying houses.
dna on Thursday reported that Liasas Foras, the Mumbai-based real estate firm, in its quarterly report said that 52,000 2BHKs in the city and 1.47lakh 2BHKs in the Mumbai Metropolitan region are lying unsold.

Why are people going for rented houses?
Pankaj Kapoor, MD, Liasas Foras, told dna that unaffordability is the main reason behind people choosing houses on rent. "Taking a house on rent is a better option than buying an expensive house and paying hefty EMIs," he said. "In Kharghar, the cost of a 2BHK (1000sqft) is more than Rs1 crore. If you go for such a house, you will end up paying Rs1 lakh as EMI. But a house of the same size in the same area will be available on a monthly rental of Rs8,000-12,000. In the current property market scenario, it is better to take houses on rent."

When should one buy a house?
Kapoor said buying property is a good option if there is steady appreciation. "But now the property market is stagnant... so people will prefer to stay on rent than buy a house. Also, investors don't want to park their money in property because of the stagnant market. They are asking developers to take the liquidity on interest. It shows the ground reality... investors are the first to understand the pulse of the market and any upcoming crisis. So, they have stopped buying the property in bulk as an investment."

How does the rental market operate?
"In the rental market, developers have no role... They cannot inflate or influence the market. The rental market is transparent. Rentals have not gone up proportionately with the property market. Only those with a huge stash of black money are parking their wealth in the real estate," Kapoor said.

What do developers say?
Shailesh Puranik, MD, Puranik Developers, however, told dna that the property market is slow but it would be wrong to say that it was going down. "I recently launched a couple of residential projects in Mumbai and Pune where I found the response very good... Many flats were sold off," he said.

What do real estate agents say?
Kailash Patil, a property agent from Thane, said that people were only enquiring about houses. "In the past two months, I have hardly sold any flats. A couple of deals are in pipelines but the sale is still to happen," he said." "The property market has been gloomy for the past eight months. On the other hand, rental enquires have increased. Potential buyers say they would stay in rented houses till property rates come down."