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Real estate portal >makaan.com has come up with a ‘buy verses rent' index to help property seekers to decide on purchase or lease/ rent factoring in prices.
Going by the index, it is worth buying property in Chennai, Ahmedabad, Gurgaon, Faridabad and Noida rather than staying on rent as it is less expensive – the rental amount being computed as equated monthly instalment for a housing loan.
Coverage
On the other hand, it is preferable to stay on rent in Delhi East, Delhi North and Dwarka. The Web site has provided a detailed table for seven cities for the purpose. More will be added in the quarters to come.
The numerical index factors in the average capital value of property, average rental value, rental yield, historical capital price movement, historical rental movement and inflation.
Called Makaan.com buy vs rent index (MBRI), a low index indicates that it is less expensive to buy a home than to stay on rental, whereas a high number denotes that it is much more expensive to buy a home than to stay on rental. MBRI has been collated both at city and sub-city level.
Mr Aditya Verma, COO, Makaan.com, said the recent revision of about 0.25 per cent in interest rates had not been factored in but would be taken into account when the index for the fourth quarter is put up. Mr Verma conceded that a minor price correction was in the offing.
Interest rate impact
On the impact of hike in interest rates, he said it was difficult as multiple factors go towards determining the index.
On the index, he said, “A property seeker today is confused between opting for a rented accommodation and paying the rental amount as equated monthly instalment for buying a house. MBRI will empower him with research based analysis. We have tried to present the finding in a manner that is easy to absorb and implement. We hope that seekers will benefit from this research.”
Database
The database of the current index comes from 32 micro-markets across cities. The Index is based on minimum size of 20,000 data points every month.
The database also includes a representation of new and resale properties. Most reports on the property sector today are based on new developments, whereas actually new properties are relatively small percentage of the real estate supply.
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