Sky reaching property prices will result in rising of home rentals. Home rentals will see an upward growth due to the increasing migration to the top cities.
BANGALORE: In all the top cities of India it is impossible for any middle income class person to own a home. The main reason is higher property prices. Yet, the increasing demand and shortage of supply, etc. too play their roles. Adding all together the home rentals in cities are expected to rise sharply.
Rental homes remain the possible option for a majority of residents who have migrated from other rural areas or tier II cities to top cities. Higher flow of population causes more demand for rented homes.
However there is a mismatch between the property price hike and the hike of home rentals. While property prices have shot up many doubles, the rise of home rentals was down by three to five percent down. (Compared only in proportion to the property price hike)
It means that there is no relation between the capital value appreciation and the rentals. If the rentals were related to it, it would have gone far higher than of what is today.
The demand for rented homes is a key factor in determining the home rentals. Where there is more demand the rentals are higher. It is the otherwise in the areas where there is no demand or very less demand.
However the rentals will be higher only if the supply is less. If there is more supply than the demand then the home rentals will not be so high.
Property prices would be another factor which determines the rentals in an area. If the property prices are so high that buying is not easy, then there will be more demand in rented homes. People prefer to own homes in areas where the property prices are not higher.
The presence of investors is still another factor. The numbers of people who invest in properties for earning rents are increasing. This also will result in the rise of home rentals.