Rent-buy gap widens as EMIs outpace rentals in Indian metros
Housing finance demand remains steady. Shift towards larger homes, loan applications in metros are holding firm.
| Photo Credit:
chanakon laorob
For many in India’s major metros, homeownership still feels out of reach. Rental hikes across cities like Bengaluru, Delhi, Mumbai, and Hyderabad eased to 7-9 per cent in 2025, a sharp correction from the steep 15-25 per cent annual jumps between 2021 and 2024 as fresh housing supply caught up with demand. Yet, buying remains far more expensive than renting.
Take Bengaluru’s Sarjapur Road, a 2BHK rents for about ₹38,000 a month, but buying the same unit for ₹1.2 crore on a 20-year loan pushes the EMI close to ₹75,000, almost double. This widening rent-buy gap has become a major hurdle for first-time buyers and middle-income families. Many are postponing purchases, shifting to peripheral areas, or compromising on size and location to stay within budget.
Why renting makes sense?
“Buying an affordable home in metros feels impractical given the exorbitant prices,” says Taher Ahmed, who works as a consultant in Bengaluru. “High EMIs and an unstable job market make ownership a challenge. Unless you go with reputed builders, delivery delays and quality issues only add to the risk. Prices need correction, or we risk ghost towns like in China.”
For others, renting still makes financial and lifestyle sense. Saurabh Garg, Co-founder & CBO, NoBroker, explains, “Even with higher rents, it offers flexibility. I can choose where to stay without being tied down.” He notes that after the steep post-COVID price surge, where ₹80-90 lakh homes jumped to ₹1.4 crore, buyers are now cautious. “People aren’t expecting those big jumps anymore. End-users are still in the market, but investors have reduced activity.”
Premium Market
The luxury segment tells a different story. With developers adding new supply, buyers have a wider choice and are taking longer to finalise purchases. “Builders have been focused on completing projects, not just launching them,” says Santhosh Kumar, Vice Chairman, ANAROCK Group. “This has stabilised rental demand in most metros, though a few premium societies continue to see pressure.”
The slowdown in IT hiring has also cooled demand in Bengaluru and Hyderabad, where rentals surged during the pandemic return-to-office wave. But demand from other sectors — BFSI and GCCs — is cushioning the impact. Improved transport infrastructure and hybrid work models are further encouraging professionals to move to peripheral areas, Kumar added.
Loan demand
Meanwhile, housing finance demand remains steady. Jatul Anand, Executive Director, PNB Housing Finance, points out that while EMIs have risen due to property price appreciation and the shift towards larger homes, loan applications in metros are holding firm. “Our retail loan book stood at ₹76,923 crore as of June 2025, with the prime metro segment contributing ₹48,478 crore.
For now, however, the EMI-to-rent mismatch remains stark. Renting will not be cheap, but compared to soaring EMIs, it continues to offer breathing space and flexibility, keeping the dream of homeownership just out of reach for many.
Published on September 1, 2025
