Why buying a home makes more sense than renting in 2024

The age-old question of whether to buy or rent a property continues to ignite fiery discussions, often with passionate arguments on both sides. Owning a home offers stability, yet renting is equally effective in securing the third pillar of the roti-kapda-makaan trinity without compromising on freedom and mobility.  Amidst the shifting market trends, the question beckons—Homeownership or residential renting in 2024? Here are some thoughts to consider–

The allure of ownership

One of the most compelling arguments for buying a property is the undeniable security of owning a physical asset. Unlike the fleeting nature of rent payments, a home represents a tangible investment that grows in value over time. Moreover, the sense of stability and permanence of your own home outclasses that of a rented home. 

Rented homes also lack the freedom to modify or upgrade the property to your taste and needs. All these benefits combined, create a resilience for home ownership that resonates deeply with many, offering a sense of accomplishment and a secure nest for one’s family for generations. Further underscoring this preference is the trend of escalating rental prices. For tenants, the prospect of owning a home with a consistent EMI becomes increasingly attractive as a shield against the unpredictability of rent hikes. 

Appreciation potential

The Indian property market has witnessed consistent growth over the years. Bolstered by the record-breaking number of project launches in 2023, Indian real E\estate heralds a tale of unprecedented optimism. This surge in activity signals a robust future for the sector, which is expected to contribute 10-12% of India’s GDP by 2025.

This upward trajectory makes buying a property a potentially lucrative investment. The steady appreciation in property value outperforms most other asset classes, offering a safer and more predictable return on investment compared to the more volatile investment avenues such as stocks, gold, and SIPs. Irrespective of these benefits, one must approach the purchase with financial prudence. One big advantage of real estate is that you only need to pay 20% as a down payment and the remaining can be a bank loan with easy monthly instalments.

Location dynamics

Location plays a dominant role in shaping property values. Established areas with mature infrastructure and a thriving population command a premium price. While these locations offer undeniable advantages, they may not always be the most budget-friendly option. For first-time buyers, exploring emerging areas with good infrastructure 10-15 km away from hotspot localities can be a smart strategy. These areas offer promising investment potential and often come with more attractive price tags. Alternatively, consider renting in an established area while simultaneously investing in a property in a developing one.

Ready to move in or under construction?

The final consideration is the stage of the property to invest in. Ready-to-move-in apartments offer immediate comfort and convenience but may come at a higher price point. If budget is a concern, under-construction projects can be a cost-effective option, allowing you to enjoy the benefits of ownership while still benefiting from lower initial costs.

Keep in mind that your apartment hunt boils down to a trade-off. Ready-to-move-in apartments grant instant access, but their premium price tag might be hefty for many. Conversely, under-construction projects are easy on pocket thanks to lower upfront costs and potential pre-launch discounts. However, you need to manage temporary housing. That would translate into paying EMIs along with rent for some time.

Budget-conscious buyers can reap the rewards of ownership sooner with a near-complete project. Negotiate lower rates due to the ongoing construction and anticipate faster appreciation once finished. This option demands patience and thorough due diligence on builder reputation and project timelines. Ultimately, choose the stage that aligns with your needs, prioritising either immediate comfort or long-term financial gain.

A holistic approach

In the current context, buying a property is a judicious decision for those who believe in buying. The prices have seen an upwards momentum and are slated to increase for at least next few years. There are no signs of prices dropping. In 1-3 years, new projects that are currently under-construction will be at peak pricing as they near completion. So, right now is a good time to buy. Over the last 2 years, the prices of real estate have appreciated a lot and that has attracted many investors to the market. 

Ultimately, the decision to buy or rent is a deeply personal one which needs a nuanced approach. Carefully assess your financial situation, long-term goals, and lifestyle needs before making a choice. Prioritise informed decision-making that aligns with your circumstances and secures your future, brick-by-brick or lease-by-lease.

(The writer is Co-founder & Chief Business Officer, NoBroker.com)