"Is it better to buy a house or rent one and save more in India?" If this question keeps popping into your mind, welcome to the "Adulting Club."
Every one of us is facing this challenge.
Buying a house sure sounds like a dream! It is the place where you'll make memories, maybe raise a family, or simply enjoy the pride of ownership. There is more to the hefty price tag and responsibilities than just numbers. It is also the emotions, ambitions, and dreams attached to that decision.
Renting, on the other hand, might feel like the easier path - less commitment and more flexibility. But without the security of a permanent home, you're constantly reminded that paying rent won't get you "your own" place to live.
The dilemma is real, especially when you're starting to build your future.
In this guide, we're diving deep. Walk through the emotions and finances of both choices - "To Buy" or "To Rent."
Buying vs. Renting a House: Balancing Emotions and Finances
Both buying and renting a house come with distinct emotional and financial parameters.
Emotional Factors to Consider Before Buying or Renting a House
Here's a comparative analysis of the emotional factors that affect your choices of buying a house or renting it:
| Aspect | Buying a House | Renting a House |
|---|---|---|
| Sense of Achievement | Owning a house can feel like a significant accomplishment, a symbol of personal success. | Renting provides the satisfaction of flexibility, and there's no long-term commitment. |
| Stability and Security | Buying a house can give you the comfort of knowing the space is entirely yours, with no eviction concerns. | Renting brings the ease of mobility but can sometimes come with feelings of temporary belonging. |
| Legacy | Buying helps you build an asset to pass down through generations. | While you don't build assets, you do build memories and experiences without being tied down. |
| Pressure | The societal push to 'settle down' often means owning a house. The FOMO when friends buy homes can also influence you. | Renting offers a respite from societal pressures, allowing you to make decisions based on your current needs. |
| Flexibility | Buying might tie you down to one place, limiting immediate mobility. | Renting allows for easy mobility, especially if your career or lifestyle demands it, without the hassle of property sales. |
| Maintenance | Homeowners are responsible for property upkeep, giving them control over their space. | Renting brings fewer maintenance worries; the landlord often handles major issues, but you might have less control over fixes. |
| Financial Freedom | Committing to a mortgage can limit short-term financial flexibility. However, once major payments are settled, there's relief from monthly rental expenses. | No heavy mortgages mean a sense of financial lightness, but monthly rents are a repetitive expenditure. |
| Shelter Instability | Ownership provides a stable place to live in for long term. | Despite being short-term, renting makes it easy to relocate. |
Financial Factors to Consider Before Buying or Renting a House
The table below outlines the financial factors to consider when deciding between buying or renting a house.
| Aspect | Buying a House | Renting a House |
|---|---|---|
| Budgeting | Consider the down payment, registration fees, brokerage, and other associated expenses. | Costs include security deposits, advance rent, and fees for property agents or brokers. Monthly rent is a recurrent cost. |
| Location and Size | Living in prime locations or bigger homes means higher costs. | Costs vary based on location and house size, but changing places is easier. |
| Specifications | Amenities like a swimming pool, gym, or garden can add to the cost of building your own home. | You can enjoy same amenities without the long-term commitment to them, but your rent might be higher. |
| Builder's Credibility | It's crucial to check the builder's past projects and reputation to ensure quality and prevent fraud. | Not a direct concern, but the quality of the rental space matters. Cross-checking the landlord's choices is necessary. |
| Long-term Investment | Buying is a long-term commitment and your property’s value could increase over time. | Renting is short term, and there's no property value gain on your part. |
| Budget Flexibility | Once you buy, changing your spending plan can be tough. | If money is tight, you can always shift to a more affordable place. |
| Variable Costs | Maintenance, property taxes, and unexpected repairs can add to expenses. | You might face rising rents or additional utility charges but no property taxes. |
| Building Ownership | Your payments over time contribute to owning the property fully. | Rent provides a place to live without a long-term commitment, but you won't own the property. |
Buying vs. Renting a House: Cost of Living in Metro Cities in India
India boasts nine prominent metropolitan cities: Mumbai, Pune, Delhi, Ahmedabad, Surat, Chennai, Kolkata, Bangalore, and Hyderabad.
Each city is overflowing with opportunities and vibrant cultures, drawing a diverse crowd of dreamers and doers. But, as the saying goes, every coin has two sides. Alongside the charm of these cities comes a rising cost of living.
General Cost of Living
Thanks to a recent survey, we have a clearer comparison of the average cost of living of a family of four and a single person living on his/her own in India.
- A family of four spends about ₹95,336.5 a month (not including house rent)
- Single person's expenses revolve around ₹27,800.7 a month (not including house rent)
Shift Towards Urbanization
The World Bank's data suggests that 35.87% of India's population resides in urban areas. This growing urban migration directly impacts demand and, consequently, living expenses.
Rise in Housing Costs
Take a look at how much you could spend on buying or renting flats in Mumbai, Delhi, and Bangalore:
| City | Flat Type | Sale Price Range (Approx.) | Rent Price Range (Approx.) |
|---|---|---|---|
| Mumbai | 1 BHK | ₹37 lakh - ₹1.41 crore | ₹17,000 - ₹60,000 |
| 2 BHK | ₹97 lakh - ₹3.30 crore | ₹40,000 - ₹1.1 lakh | |
| 3 BHK | ₹2.17 crore - ₹7.31 crore | ₹70,000 - ₹2.5 lakh | |
| 4 BHK | ₹4.40 crore - ₹15 crore | ₹1.3 lakh - ₹5 lakh | |
| Delhi | 1 BHK | ₹15 lakh - ₹54.7 lakh | ₹7,500 - ₹23,940 |
| 2 BHK | ₹25 lakh - ₹1.45 crore | ₹13,000 - ₹39,999 | |
| 3 BHK | ₹56.5 lakh - ₹4.5 crore | ₹25,050 - ₹1 lakh | |
| 4 BHK | ₹1.90 crore - ₹12 crore | ₹41,000 - ₹2.3 lakh | |
| Bangalore | 1 BHK | ₹20.2 lakh - ₹74.1 lakh | ₹6,160 - ₹22,607 |
| 2 BHK | ₹42 lakh - ₹1.04 crore | ₹13,000 - ₹45,000 | |
| 3 BHK | ₹65 lakh - ₹2.69 crore | ₹25,000 - ₹85,000 | |
| 4 BHK | ₹1.83 crore - ₹6.40 crore | ₹50,000 - ₹2.1 lakh |
Disclaimer: The prices mentioned are collected from different sources across the Internet. They are for reference only and might change. This table is meant to provide a general idea and does not endorse any buying decisions based on these figures.