After Demonetization Are Rental Rates Going Up?

With the demonetization move by the government, the real estate sector has witnessed some drastic changes. While property sales have come to a halt, the rental market has witnessed substantial growth. As more and more customers postpone their buying decisions, there is more demand for rental property. This subsequently results in higher rental rates, especially in major cities across the country.

Buying v/s Renting

There is a lot of uncertainty in the property market when it comes to buying homes. The sellers and buyers are waiting for a correction in prices and standardization of costs. In the meanwhile, renting out becomes the obvious choice. Property brokers are now focusing their attention on the rental market. Several property portals have relaunched their rentals business in the hope of cashing in on the current trend. Even home owners are willing to rent out their properties and make a profit rather than suffering a major loss by selling for reduced prices. Since the prospect of buying is ruled out for the time being, end users have no other option than getting rental properties for the prices quoted by the owners, say experts at Property.Sulekha.com. 

Demand v/s Increased Rates

A large number of unsold properties are readily available for rent. However, it is interesting to note that even though the supply is in surplus in many places and can quite easily meet the demand, the prices are not coming down. The rental prices have gone up by 8% to 12% in big cities like Mumbai, Delhi, Chennai, Bengaluru, and Pune. Even smaller cities are witnessing an increase in the rental rates by 5-8%. In cities like Noida, apartment owners who were earlier expecting to make a fortune in the resale market, have now turned to the more profitable rental market. There are many Noida apartments for rent with rental values increased by almost 10-12% post demonetisation. Since there is no standardisation of rental rates, the trend is expected to continue until the new real estate laws are in place.

Future of Rental Market

Indian cities have a greater proportion of moving population who need temporary housing facilities. There is great demand for fully furnished rental properties, and this is expected to rise in the coming years. This also contributes to the increased demand for rented properties and higher rents. This trend attracts more investments in the rental property sector. Properties developed for rentals are also on the increase as this is a long term investment and brings in more profit than selling.