Don’t we all have that one itch of wanting to own our own house? But with the drastic change in our lifestyles and preferences and a millennial-dominated population, that ‘itch’ has been shifted to renting a house. A house that can be switched on at any time and can be Instagram-worthy.
In India, the real estate market is one of the most significant and profitable sectors for investing, quantitatively, the residential sector makes up the majority of the real-estate market. The pandemic period has been an extremely diabolical tale for the housing market, which witnessed a grand crash and has been trying to slide out of the slump for over two years.
Now, let’s dive in to know ‘WHY’ we are at a historic point in the Real Estate housing market.
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Rentals – A Millennials Preferred Choice
Rental housing is the only sector of the real estate market making stupendous profits and soaring high, the question that arises is WHY exactly rentals are this generation’s preferred choice.
Gen Z and millennials are risk-takers by default. The new-age approach of renting rather than buying and paying off EMIs is an in-built mechanism for them. After going back to normal, this radiant and enthusiastic generation (the largest consumers in the housing market) prefer not to invest and chose rather to rent out as it is easy and much feasible with the changing jobs.
The Era of the Landlords
Now, when we have a better understanding of why rentals are preferred choices, the other thing which we need to pay heed to is WHY it is the era of landlords.
The raging trend and soaring market of rental housing have been beneficial for landlords or anyone who owns a property whose even the smallest part can be put to good use so as to earn a rental/passive income. To understand why landlords are enjoying what they have, here are two major points!
- PAN India Rental Housing Market Growth
ANAROCK Group states that the demand for rental housing in the top seven cities has increased by a whopping 10%-20% since the year 2019 (pre-COVID). A significant hike in the price can be seen in both Mumbai, Bengaluru, and NCR ranging from 15% to 15%-20% can be witnessed.
However, this transition has been beneficial for landlords, but the tenants are the ones tasting its bitter taste.
- Income-Expense Balance of the Working Class
The rents are soaring, but the incomes are still the same as they were pre-COVID and during COVID. People have been struggling to find a good balance between their income, expenses, and increasing rent prices.
Now, in the year 2023, finally, it’s time for landlords to be chirpy, hopeful, and greedy (no pun intended).
Government Support: National Rental Housing Policy
The third and the most prominent reason for WHY the rental market has hit an historic high lies in the amended Government Housing Policies.
Did you think you were all on your own? The government has a trick or two to keep a balance between the duties and rights of both tenants and landlords. The main aim of the Tenancy Act is to establish a framework for the control of tenancy in both commercial and residential buildings. Basically, helping both parties be at peace. These rental agreements aid in registering with the appropriate authorities.
Such attempts promote rental housing. With the implementation of rental housing regulations, the sector can be promoted, and rental housing can be provided in all urban areas across the country! Be it Kashmir or Kanyakumari.
Poking a Hole in Global Pockets
Listen up, folks, because I’m about to drop some knowledge on why the rental housing market is creating chaos in global countries.
Despite a number of setbacks in recent years, Indian investors and people like you and me (safe gamblers) are largely optimistic due to a number of factors. Currently, economic growth is a prime factor, and India is expected to have a $10 trillion economy by the end of this decade. Surprised? Don’t be. The middle-class households are upgrading to larger and more luxurious homes, might I add! The increased urbanisation, where towns are currently preparing to become larger cities, is driving up demand for larger and better homes.
In financial terms, an increase in the repo rate will determine the demand for housing in 2023. According to experts, announcements of comparable increases are possible. With a stable foundation and reduced mortgage interest rates, the market will expand, and the real estate sector will continue to become stronger.
At a compound annual growth rate (CAGR) of 10.7%, the worldwide real estate rental industry is predicted to increase from $2164.29 billion in 2021 to $2396.61 billion in 2022. The companies’ reorganisation of operations and recovery from the COVID-19 impact, which had previously resulted in restrictive containment measures involving social estrangement, remote work, and the closure of commercial activities that created operational challenges, are primarily responsible for the growth. With a CAGR of 9.7%, the market is anticipated to reach $3476.58 billion in 2026.
Move Out to Move In!
Are you planning on buying a new car, but what about the parking? Looking for a good school for your child, but it’s too far away?
Ah, renting from one place to another – it’s a common phenomenon, and there are plenty of interesting reasons why people choose to do it. With rental housing touching a new high in India, you can find any kind of rental in every nook and cranny of any city. But nowadays, we refuse to give up the comfort.
Not enough parking space? Let’s move. Not a good neighbourhood? Let’s move. No parks in the vicinity? Let’s move.
There is definitely an upside to being in this market. For starters, renting provides a sense of flexibility that owning a home simply can’t match. When you’re renting, you can move around as often as you want, without having to worry about the stress and expense of selling your property. This is especially appealing for those who like to travel, or for those who want to try out different neighbourhoods or cities before committing to a permanent residence.
People choose to rent from one place to another for a variety of interesting reasons, including flexibility, the variety of properties available, avoiding the responsibilities of homeownership, and the social opportunities that come with living in rental communities. Whether you’re a seasoned renter or a first-time renter, the rental market caters to everyone!
Rent or Buy – The Question Persists
Is this rental trend going to continue and thrive? Are landlords going to secure a ‘happy-go-lucky’ phase for a long time? Are we ready to digress from the motto ‘YOLO’?
Well, nobody knows what the future will hold, but one thing that can be ascertained is that this rental housing market is not going to see a downfall anytime soon. Especially, in India, with the revival in residential demand actually causing a 5% increase in prices among the top eight cities during Q2 2022.
The rental market is poised for explosive growth. With more and more people moving to urban areas, the demand for rental properties is skyrocketing. In fact, I predict that in the future, people will be so desperate for rental properties that they’ll start renting out their own bedrooms while they sleep on the couch! But let’s not get carried away.
But seriously, the future of the rental market in India looks bright. With the rise of technology, the rental market will become even more streamlined and efficient. From co-living spaces to rental-only neighbourhoods to virtual reality tours, the rental market is evolving to meet the needs of modern renters. So, get ready to rent, because the future is looking pretty darn exciting!
