BQPortfolio: Rent Or Buy A House — Has The Debate Gotten Stronger In Post-Covid India?
BQPortfolio speaks to citizens from across India about their financial goals and helps them access expert advice on how to achieve them.
The uncertainty brought on by the Covid-19 pandemic has forced people to have second thoughts about buying a house. This, despite conditions favouring home buyers.
Interest rates are at historic lows, and real estate developers, weighed down by high inventories and low sales, are keen to cut deals. But with sales of houses in India's top eight cities tumbling to the lowest in a decade in the first half of 2020, significant capital appreciation seems unlikely in the next few years.
India's residential real estate market, however, was losing favour even before the virus outbreak. Prices in major markets have remained stagnant over the past few years, with inventory piling up on account of a lack of demand.
“Buying a house as an investment doesn’t make much sense at the moment,” according to Harshvardhan Roongta, certified financial planner and co-founder of Roongta Securities. “Looking at the cost of acquisition and the cost of ownership, which usually includes the interest cost on a loan, unless you’ve sold your property for twice the original cost, you’ve not made much money.”
But if a person is reasonably confident about their income, and wants to occupy the house, it might make sense to go out and buy one now, he said.
In this special episode of BQPortfolio, BloombergQuint spoke with Roongta and Anuj Puri, chairman of Anarock Property Consultants, about the prevailing conditions in the major real estate markets, and whether the argument against buying a house has grown stronger.
Watch the full episode here: