Housing rents up by 25-30% across major cities from 2019: Housing.com report

Currently, the IRIS index for rent is trending 23 points higher than the buying index.

January 24, 2024: Housing rents have surged by a substantial 25–30% in top micro-markets within major cities since 2019. Meanwhile, the average monthly rents for residential properties have experienced a notable uptick of 15-20% across major top 8 cities compared to the pre-pandemic era of 2019. This surge in rents has contributed to a modest enhancement in rental yields. Despite these positive trends, there remains a considerable gap to bridge when compared to global real estate hubs such as New York, London, Dubai and Singapore, as highlighted in a report by Housing.com.

Country’s leading Real estate tech platform Housing.com latest report titled ‘Residential Rents on the Rise! A report on rental property in India’ shows the growth in monthly average rent has been higher than the appreciation in capital values.

While property prices in top cities saw a 15–20% growth compared to pre-pandemic levels of 2019, average monthly asking rents skyrocketed by 25–30%, with certain key localities in service sector dominant cities witnessing significant rent spikes exceeding 30% during the same period.

Not only median rents, but there is a surge in demand for renting a home post pandemic as indicated by Housing.com IRIS index. The index which gauges upcoming demand by tracking the online search activity on the platform, indicates that post pandemic the online rental search activity has surged ahead of buying activity. Currently, the IRIS index for rent is trending 23 points higher than the buying index.

 

Source: Residential Rents on the Rise! A report on rental property in India 2024, Housing Research

Dhruv Agarwala, group CEO, Housing.com, PropTiger.com and Makaan.com, said, Post-pandemic, there has been a sharp revival in housing demand, both for buying and renting purposes. Housing market has seen price appreciation in the last two years after almost a  decade of stagnation. The average price rise has been modest at a city level, but there has been a sharp rise in some major locations of top cities."

Ankita Sood, head of research at Housing.com, said, “Rental returns in India historically trailed global counterparts due to factors like higher interest rates and acquisition costs. However, post-pandemic dynamics, including rising property values, affordability challenges for potential buyers, and a limited supply of ready inventory, has sparked a significant surge in rental demand. We see notable spikes to the tune of 25–30% in CBDs of service sector dominant cities like Gurugram, Bengaluru, Pune and Hyderabad.”

“Looking ahead, with a fresh ready supply set to hit the market only in the next 2–3 years, we expect the momentum in rental demand to persist. This sustained growth has piqued the interest of both mid and long-term investors alike, signalling promising opportunities in the rental market”, Sood added.

Housing.com Research has also computed the price-to-rent ratio to compare the rental returns in India’s key housing market with major global cities. The price-to-rent ratio is determined by dividing the median property value by the median annual rent price within a specific geographical area.

Lower price-to-rent ratio means higher rental yield or return on investment for property owners. This ratio helps in evaluating the comparative affordability of renting versus purchasing a property.

 

Price-to-rent ratio – World Vs India

Sr no	City	Country	Price-to-Rent Ratio
1	New York	United States	17
2	Tokyo	Japan	42
3	London	United Kingdom	24
4	Dubai	UAE	15
5	Paris	France	31
6	Seoul	South Korea	40
7	Singapore	Singapore	23
8	Sydney	Australia	29
9	Mumbai (MMR*)	India	35
10	New Delhi	India	37
11	Noida	India	33
12	Gurugram	India	36
13	Pune	India	31
14	Hyderabad	India	25
15	Bengaluru	India	25
16	Melbourne	Australia	21
17	Hong Kong	China	36

* Mumbai Metropolitan Region includes Mumbai, Thane and Navi Mumbai.

Source: Residential Rents on the Rise! A report on rental property in India 2024, Housing Research