The 2025 Overview of Housing and Rental Market

To assess renting versus buying, it's beneficial to understand the situation in 2025, particularly in India. Main patterns:

Home price growth is slowing: Following significant increases (over 20% year‐on‐year in numerous locations), predictions for FY25 anticipate more gradual increases in property values (approximately 5‑6% in various metropolitan areas).

Rents are increasing, but stabilizing: In key metropolitan areas such as Delhi-NCR, Mumbai, Bangalore, etc., the rental inflation in H1 2025 averages 7-9%, lower than the elevated rates seen in prior years. Certain micro-markets linked to new infrastructure (metro lines, tech parks) are experiencing more significant increases.

Interest rates and borrowing costs: The Reserve Bank of India (RBI) has implemented several repo rate reductions; these are anticipated to lead to a decrease in home loan rates, although borrowing remains quite costly. Affordability continues to be an issue, particularly in Tier-1 cities.

The rise in supply, particularly in outskirts and developing corridors, is assisting in tempering both rent increases and price surges in various regions due to new housing inventory entering the market.

The affordability gap continues to be significant: The difference between people's earnings, rental prices, and EMI expenses remains substantial. For numerous people, leasing continues to be more practical in the short to medium term