Bengaluru Rent Soars: Is Buying A Home The Better Option?

With areas like Sarjapur Road seeing soaring rent hikes, while Thanisandra shows stronger property appreciation, the rent vs. buy debate has never been more intense.

Bengaluru’s tech corridors are witnessing a surge in rental prices, prompting many residents to reconsider their housing choices. According to Anarock, rental and capital value growth have shown distinct trends across key areas. In some locations, such as Sarjapur Road, rental values have risen significantly faster than property prices, making renting an increasingly expensive but high-demand option. In other areas, however, such as Thanisandra, property values have appreciated more than rents, suggesting stronger long-term investment potential. AV Shailesh Kumar, proprietor, Vignesh Projects, attributes Bengaluru’s urban rental market surge to high demand in areas with IT hubs, reputed schools, colleges, and medical facilities.

Real estate consultant Suresh Gowda advises those confused between renting and buying to assess the area’s property trends before deciding. “If property values are appreciating faster than rents, buying could offer better long-term value. If rent hikes make EMIs a comparable expense, purchasing a home might be worth considering. Otherwise, opting for areas with slower rental growth could be a more practical choice.”Nevertheless, with EMIs often matching or even exceeding monthly rents, the age-old debate of buying vs. renting a home, has never been more relevant.

The financial dilemma
Akshat Pande, a personal finance enthusiast, explains, “Homeownership isn’t just a financial choice; it’s an emotional one too. If you’re certain you never want to buy a house and are comfortable renting indefinitely, that’s one approach. However, if rents rise beyond a certain percentage every year—say 10 per cent, then buying might make more sense in the long run, even if you originally planned to rent.” According to him, exponentially rising rents could make future affordability uncertain, and there’s no guarantee your income will sustain them indefinitely. “On the other hand, if rent increases remain predictable, around six to seven per cent annually, renting can still be viable. The challenge, especially in a city like Bengaluru, is the unpredictability of rent hikes, which can sometimes jump by 20 per cent in a year. Given this uncertainty, buying could be a safer bet for long-term financial security,” Pande suggests.

The hidden costs
The hidden costs of homeownership primarily arise when EMIs are poorly planned. “While EMIs are the main expense, the psychological pressure of loan repayment can be significant if finances are mismanaged. Many claim that maintenance costs are a major hidden expense, but they are often exaggerated. The benefits of owning a home—such as not dealing with landlords or unexpected relocations—often outweigh these costs. If EMIs are well-structured, maintenance expenses are relatively minor compared to the high advance payments renters must make. Ultimately, beyond EMIs, homeownership doesn’t come with many hidden costs unless financial planning is poor,” opines Pande.

The pre-EMI strategy
Pande suggests that a pre-EMI strategy can help balance homeownership costs and investments. “If you buy an under-construction property, your EMIs remain significantly lower until possession, as you only pay the interest component. The amount saved can be invested in various financial instruments, helping you build wealth alongside owning property. This approach works well if you expect your income to grow in a few years, allowing you to manage initial costs better. Over time, homeownership protects you from rising rents, while diversified investments ensure long-term financial stability. It’s not about choosing between homeownership and investing; both can complement each other. A new trend in the banking sector is the introduction of customised EMI plans tailored to buyers’ financial comfort. Educated and well-placed buyers with substantial savings are increasingly stepping into homeownership, but they are also becoming more cautious and strategic in their approach,” shares Kumar.

The way forward
As Bengaluru’s rental market continues to evolve, renters and buyers must navigate an increasingly complex landscape. “The decision to rent or buy hinges on various factors—rising rents, fluctuating property values, infrastructure challenges, and individual financial goals,” advises Gowda. Experts suggest that careful planning, financial foresight, and market awareness can help individuals make informed housing decisions that align with both, their present and future needs.