Rent vs buy? Why young Indians are rethinking homeownership

India Today

26-05-2025

Not long ago, owning a house was considered a big milestone for every Indian. It meant stability, success, and a sense of pride. Parents often encouraged their children to buy a home as early as possible, even if it meant taking huge loans. But this sentiment is now shifting, especially amongst younger Indians.Many in their 20s and early 30s are now carefully weighing whether they should rent or buy. advertisementIndia Today spoke with Pashin Jhobalia, Chief Marketing Officer at House of Hiranandani, and C Prabhakar, Director of Gopalan Enterprises, to understand this changing mindset.
'Yes, we are definitely seeing younger Indians defer homeownership,' Prabhakar said. "Sky-high property prices, economic ups and downs and the wish to move jobs easily are key drivers. Add student loans and higher interest rates to the mix, and buying simply feels out of reach for now. Yet, the dream of a home hasn't vanished—it's just on hold.'On the other hand, Pashin Jhobalia paints a slightly different picture. In their township in Thane, there's been a sharp rise in young buyers. "In 2023–24, 134 millennial buyers purchased apartments within the estate. This number surged to 366 in 2024-25, marking a remarkable 173% increase. These buyers now represent a substantial share of our customer base,' he said.FINANCIAL FREEDOM VS LONG-TERM WEALTHadvertisementRenting offers a level of comfort, especially for those who want to keep their options open. "Renting often offers better immediate financial flexibility due to lower upfront costs, no maintenance burdens, and ease of relocation, especially for those with fluid career paths. This allows for diversified investments and greater liquidity in the short term,' noted C Prabhakar.'However, it's crucial to remember that homeownership provides long-term wealth creation and stability that renting cannot,' he added.Jhobalia is of the same opinion. "While renting offers undeniable short-term financial flexibility, particularly for young tenants trying to navigate their evolving careers, homeownership can prove vital for long-term wealth creation. Real estate has proven to be one of the few assets consistently appreciated while offering significant emotional security, advantageous tax benefits, and fostering long-term savings,' he said.HOW JOB CHANGES AND EMIs ARE CHANGING THE DEBATEThe pandemic changed how we live and work. With hybrid work models and more job mobility, people are seeking homes in well-connected areas. This is boosting interest in integrated townships that offer comfort and convenience.At the same time, rising EMIs due to rate hikes made renting appear cheaper.But now, with the RBI reducing the repo rate, home loans are more affordable again. 'RBI's recent repo rate cut in 2025, lowering it from 6.25% to 6.0%, has eased the loan burden for homebuyers. This, along with surging rents in metropolitan areas, has brought EMIs closer to monthly rents, making homeownership a financially sensible decision,' said Jhobalia.WHAT SHOULD A YOUNG EARNER DO?advertisementIf you're 28 and earning Rs 1 lakh a month, what should you do — rent or buy?Prabhakar recommends building a strong financial base first. 'Prioritise establishing an emergency fund, securing adequate insurance, and consistently investing for retirement,' he said.'Once these crucial pillars are in place, then aggressively save for a down payment, ensuring a balanced financial strategy without compromising long-term security," he added.Meanwhile, House of Hiranandani's CMO emphasises that real estate is a strong, appreciating asset. Owning a home saves you from unpredictable landlords and gives you a sense of stability. Developers are also offering easier payment options to help young buyers.He further mentioned, 'Real estate is a tangible asset that has consistently appreciated over the past decades,offering long-term equity over recurring rental expenses and yielding no returns. Beyond this, homeownership offers multiple tax benefits for the homeowner.'COMMON MISTAKES YOUNG BUYERS MAKEMany young buyers often get caught up in the excitement of owning a home and overlook key financial details. According to Jhobalia common mistakes include underestimating the total cost, which involves taxes, registration, and ongoing maintenance. Another is ignoring their credit score, which can directly affect loan eligibility and interest rates.advertisementSome stretch their finances too thin by opting for high EMIs, leaving little room for emergencies or other goals. Skipping proper market research is yet another error. Experts advise young buyers to plan carefully and avoid making emotional or rushed decisions.WHAT'S THE RIGHT AGE TO BUY?There's no perfect time or age that works for everyone, say experts. 'Your early 30s can be a good time. By then, most people have more stable jobs and better savings. Ideally, your EMI should be no more than 30–40% of your monthly income. If your finances are in place, you don't need to wait,' stated C Prabhakar.Jhobalia added, 'The sooner you invest in a home, the more likely the investor can enjoy the benefits of capital gains and rental yields.'WHAT LIES AHEAD?In the next five years, the rental market is expected to become more professional, said Prabhakar. Co-living spaces, tech-enabled services, and better amenities will attract renters. However, rents, especially in cities, are also likely to rise, nudging more people towards buying.advertisementJhobalia noted, 'With strong demand and limited housing supply in the urban areas, rent prices in the metropolitan areas are projected to climb 7%-10%, which means rental costs outpace the expected consumer inflation.''With rental prices approaching the typical monthly EMIs, the long-term rationale of buying a home is becoming increasingly attractive. This transformation will shift the demand towards owned properties, especially among financially secure millennials,' he added.Meanwhile, it's not just about owning a house—it's about owning it at the right time, for the right reason. Renting may offer comfort and flexibility today, but homeownership brings lasting value. The key is to understand your priorities, plan wisely, and choose what works best for your life—not just your wallet.