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Business News/ News / India/  Buy vs rent: HDFC CEO confident on India's growing real estate demand in coming years. Here's why

Buy vs rent: HDFC CEO confident on India's growing real estate demand in coming years. Here's why

The current vice chairman and CEO of Housing Development Finance Corporation, Keki Mistry, expressed his confidence in the growth of real estate demand in India. He said that the growth will be led by India's young population

Amid the ongoing debate of rent vs buy, HDFC chief has said that young India will boost housing demandPremium
Amid the ongoing debate of rent vs buy, HDFC chief has said that young India will boost housing demand

As the perpetual debate of buy vs rent in India is nowhere to end, HDFC head, Keki Mistry, expressed his confidence in the boost in housing demand led by India's young population in the coming years.

In his recent interview with Financial Times, the HDFC CEO, said that India's young population will propel the demand for housing for years to come. This will be possible due to the rising incomes of the Indian population which will make housing affordable for them.

“What gives me confidence that the growth will remain strong for several years is the fact that India has a young population. All these younger people will get to an age where they will necessarily need to buy a home," Financial Times quoted Keki Mistry, chief executive of the Housing Development Finance Corporation (HDFC).

Structural Demand for housing financing

Driving on the strong structural demand in real estate, Mistry opined that there will be a strong structural demand for housing financing as well. He mentioned that over half of India's population is aged under 30. While the average first-time homebuyer is aged 37-38, said the HDFC bank CEO.

Mistry said that HDFC's net profits jumped by 21 per cent due to robust house-buying trends in India. The demand was higher in smaller towns and cities. He expressed that affordability is a lot better than what it used to be in the past.

Other opinions on buying vs renting a property

Experts have varying opinions on whether one should buy or rent a property in the current scenario. Provided the long period of a home loan, factors like a single time hike or pause of repo rate and monthly inflation don't have a significant impact on buyers' decisions.

“Sometimes renting can be even smarter than owning a house, even when you can afford it. When buying a house, our assumption usually is that the price of the house will appreciate over time, it will build equity, and also protect us from rent spikes. But there are various pockets in India, where the house owners didn’t get much appreciation if you see the 10 years," Shruti Jain, CSO, of Arihant Capital told Mint.

Arvind Nandan, MD – Research and Consulting, Savills India suggests people of buying a property if they find a good deal and are financially capable to sustain the cost.

Zerodha co-founder Nikhil Kamath believes that there will be a fall in house prices in the coming time, with the rise in supply in the real estate sector to match the growing demand for houses.

“Looks like a short-term phenomenon; as long as you can #rent at 3 per cent and #housing loan rates are over 8 per cent, this won't work. If I had to bet on house prices going down vs rent going up to reach equilibrium, my bet is still on the former," said Nikhil Kamath in a tweet in April.

Jump in Housing loans in March 2023

During March banks increased the number of personal loans they wrote by 20.6 percent year on year, compared with 12.6 per cent in the same month a year earlier. According to the Reserve Bank of India, the YoY rise in personal loans in March was led primarily by ‘housing loans’.

In one of its latest reports, Anarock said that unsold housing stocks have declined 12 per cent to 6,26,750 units at the end of January-March in 2023 from 7,13,400 units as of March 31, 2018. It also said that there has been an average of 10% rise in rents in metro cities like Bangalore, Mumbai, etc.

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Updated: 06 Jun 2023, 02:58 PM IST
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