Real estate outlook: Should you rent or buy property in 2025?

Asked if he would continue to stay on rent or has plans to purchase an apartment in 2025, he said that his budget of ₹1 crore does not permit him to buy a house right away as he does not have the corpus set aside to make the down payment yet. Besides, the only options available in this price range would be in the resale segment or a stuck project completed by a new developer.

Should you rent or buy an apartment in 2025?

Before rushing to buy an apartment, one should consider one’s budget and the availability of ready finance. Estimate the total cost of ownership, including parking charges, stamp duty, registration charges, and interiors. Consider the monthly maintenance charges you may have to pay the housing society.

Also, remember that not only are interest rates high, but so are rentals.

In addition to the funds available, a prospective buyer should consider the project’s location, distance from the workplace, amenities available, public transport, cost of living, pollution, and crime levels.

Keep three to four options open, and don’t fixate on a single property. The golden rule is to explore. Of the four properties you select, at least one developer or seller in the resale market will get back to you. The golden rule is to negotiate hard.

Real estate experts point out that living on rent does not help you create an asset. Homeownership secures an asset. Also, housing retains its value in uncertain times and appreciates in markets where facilities such as infra, hospitals, schools, and shopping centres are in place. Prospective buyers should assess an area based on the connectivity it offers to the city centre and the distance to the workplace.

Plan judiciously. Ask yourself if you can afford an equated monthly instalment

Check your finances before you decide to buy a property. If you do not have at least 30 to 40 per cent of the amount to be paid as a down payment, advise a few experts. Continue to stay on rent.

Remember, banks will only fund 80 per cent of the cost. Those who already own a home can consider upgrading to a more spacious apartment.

Housing loan experts point out that as far as possible and depending on your age, it’s always advisable to pay a sizable amount as a down payment. This is important because you may be able to service an EMI today but not so in the future if you do not have a job.

Anuj Puri, chairman of Anarock Group, believes that in 2025, “we can also expect some rate cuts by the RBI, which would reduce interest rates for homebuyers, reinforcing the long-prevalent preference for homeownership as opposed to renting. Of course, a lot also depends on what the upcoming Union Budget holds in store.”

Bear in mind that areas that have matured over the last five to 10 years and there is a sizable population living there or there is metro connectivity at a distance of two to three kilometres are likely to command higher prices. Therefore, if an area has come up recently and has good infrastructure, it may be advisable to invest in a property 10 to 15 km away. It may also be a good idea to rent a house in an area where you may wish to invest in a project in the future.

Should you buy a ready-to-move-in or an under-construction apartment?

Decide whether you want to buy a ready-to-move-in property or an under-construction one immediately. If you have a sizable amount saved to be paid upfront, you may want to buy a ready-to-move-in apartment. But if your budget is slightly stretched, you can consider a soon-to-be-ready project that is at least 80 percent complete. There will be minimal risk of the project getting delayed. Make sure that the real estate project has received an occupancy certificate from the authorities and that the flats are being registered.

But if you think you don’t have enough to pay upfront as a down payment, you may want to go in for an under-construction property. Make sure that the builder has delivered projects in the past. There are always more options available for under-construction projects.

“An under-construction project gives you an advantage of deferred payments. You can manage finances better, presuming property is delivered in the next three years,” say real estate experts.

Should you invest in a residential or commercial property?

A few real estate experts believe investing in commercial assets is better than residential property. “Investing in commercial assets makes sense as this asset class gives a steady rental yield of 7-8% and potential capital appreciation of 4-5%, totalling 11-13% versus a residential asset that gives a rental yield of 2% and low single-digit capital appreciation,” opines Abhishek Kiran Gupta, CEO and co-founder, CRE Matrix, a real estate analytics firm.

CRE Matrix calculated the returns of both commercial and housing assets over a 10-year period and found that if an investor invested ₹10 lakh in a commercial asset, the value was 3X in 10 years, and in the case of a housing asset, it was 1.7x in 10 years.

Should you invest in delayed projects where construction has begun?

According to real estate experts, some SWAMIH-backed projects could also be available to homebuyers. Having said that buyers exploring such projects should make sure that funding for these projects has been organised and construction has resumed

To rent or to buy property depends on an individual’s priorities

According to Samantak Das, Chief Economist and Executive Director – Research & REIS, JLL India, buying or renting a property is a different decision based upon individual priorities, disposable income levels, and preference for flexibility or stability, among others. Before the pandemic, while buying a property was largely a preference among the mid-level workforce, now the average age of buyers has reduced significantly, with millennials and Gen Z investing in properties largely driven by their inclination towards quality lifestyle standards backed by higher disposable income levels.

The decreasing gap between home loan EMIs and housing rentals during the pandemic has also influenced higher property investments. The sharp increase in rentals, particularly in Tier I cities and near prime office destinations with the return of the workforce, has resulted in this declining gap. Affordable home loan rates have also influenced the rising demand for home ownership across various target groups.

“With housing rentals being on a steady growth curve, buying seems to be a better proposition for a large part of the target clientele, compared to paying higher rents,” opines Das.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE concurs saying that the decision to purchase or rent a property in India in 2025 will be contingent upon individual circumstances and financial goals.

“While homeownership offers long-term investment potential, tax benefits, and the stability associated with property ownership, it also entails significant upfront costs and substantial long-term financial commitments. Renting provides flexibility, lower upfront costs, and limited financial responsibility for maintenance. However, it lacks the investment potential and sense of ownership inherent in homeownership.”