Mumbai housing dilemma: To buy or rent? Expert advice inside

The statement, ‘Mumbai is a city of dreams,' has to be one of the most cliched yet true statements. People from far-off places come to this ‘Maya Nagri' to make it big. What's more, they settle here and never return to where they originally came from. While some bring along their family, some start building one here. Is it easy? Never. Is it possible? That depends on the kind of decisions one makes.

Mumbai is one of the most expensive cities in not just India, but the world. Hence, lucky are those who already own a property in the city that they call home. Popular opinion is that it takes a common man's whole life to be able to afford to buy a house in Mumbai. Yet, couples, young and old, aspire to own a house here but many opt to stay in rented apartments instead.

"Mumbai is one of the most expensive cities in India, especially in terms of housing. With skyrocketing real estate prices and high rental rates, it poses significant challenges for residents. Today, independent couples in their late 20s or 30s are increasingly opting to stay in rented homes due to the exorbitant property prices in Mumbai and the flexibility that renting offers," says Mahima Vacchharajani, chartered accountant and finance content creator.

On the contrary, Shivani Priyam Patel, director, Assotech Group (real estate builders and developers) says, "Newly married couples in Mumbai face a significant decision-making challenge regarding whether to buy a house or continue renting. While the answer depends on various factors such as financial stability, long-term plans, and personal preferences, I believe that both options have their merits. Purchasing a house provides stability and the opportunity for long-term investment while renting offers flexibility and freedom from maintenance responsibilities."

She adds, "Based on my observation, independent couples in their late 20s or 30s are increasingly leaning towards purchasing a house of their own rather than staying in a rented home. This shift in preference can be attributed to several factors, including the desire for long-term stability, investment opportunities, and the availability of affordable housing finance options. Additionally, owning a home provides a sense of pride and security, which appeals to many young couples as they plan for their future together."

Also Read: Renting in Mumbai? Your guide to budget-friendly home decor

Amidst figuring out a definite and stable career path and trying to work towards a secure future with their partner, newly married or soon-to-be married couples often find themselves in a pickle. Midday.com sat down with Vacchharajani and Patel to help you and your partner navigate the right path towards housing in Mumbai.

Cost of renting and buying a house in Mumbai
The cost of living in Mumbai is a primary concern for many envisioning life in India's bustling city of dreams. Patel tells us, "A 1-BHK rental property in Mumbai can cost you in the range of Rs 25,000-2.5 lakh per month. In case you plan to purchase a property, Mumbai is one of the most expensive cities in India, with prices in core areas starting from around Rs 1.5 crore for a 1-BHK apartment measuring 350-400 sq ft."

The real estate market in Mumbai is characterised by high demand and limited supply, driving property prices to exorbitant levels. Recent statistics consistently place Mumbai among the top cities globally in terms of property prices per square foot. Additionally, the overall cost of living in Mumbai, inclusive of housing expenses, surpasses that of many other cities in India, presenting a formidable challenge for numerous residents.

Determining factors to buy or rent
Whether to stay in a rented house or to directly purchase a flat is a personal decision and depends on the cumulative income of the couple, financial backing from the family, job security and other such factors.

However, according to Vacchharajani, "It's advisable for soon-to-be-married couples in Mumbai to initially stay in rented homes to assess their financial situation, career stability, and long-term goals before committing to a property purchase. Individuals or couples with stable incomes, long-term residency plans, and a desire for property ownership should consider purchasing property in Mumbai."

Sharing her piece of advice, Patel states, "It can be wise for soon-to-be-married couples with a decent or good enough salary to consider purchasing a house in Mumbai. Owning a home offers numerous advantages, including long-term financial stability, potential appreciation in property value, and the freedom to customise and personalise living spaces according to one's preferences. Moreover, with the availability of various home loan options and favourable interest rates, coupled with the emotional significance of homeownership, investing in a property can be a prudent decision for such couples."

Also Read: Sharing the load: Couple's guide to financial planning for a successful relationship

However one must note that renting too has its advantages. It offers flexibility and mobility, allowing couples to explore different neighbourhoods and housing options without committing to a long-term investment.

Additionally, renting can be financially advantageous for couples who prioritise saving for other goals or who are uncertain about their long-term plans.

This said it is also essential to consider the potential drawbacks of renting, such as lack of stability and the absence of equity accumulation, before making a decision.

When considering purchasing a house in Mumbai, Patel says, there are several key factors that should be taken into account:

1. Budget: Determine a realistic budget based on your financial situation, including down payment, monthly mortgage payments, and additional expenses.

2. Location: Research and choose a neighbourhood that meets your lifestyle preferences, commute requirements, and future development prospects.

3. Property type: Decide whether you prefer an apartment, villa, or independent house, considering factors such as size, amenities, and resale potential.

4. Legal compliance: Ensure that the property has clear titles, necessary approvals from authorities, and compliance with all legal requirements.

5. Loan options: Explore various home loan options offered by banks and financial institutions to find the most suitable terms and interest rates.

6. Resale value: Evaluate the potential resale value of the property based on market trends, location demand, and future development plans.

7. Amenities and facilities: Assess the availability of essential amenities such as schools, hospitals, shopping centres, and recreational facilities in the vicinity.

Also Read: Why is it so tough to find rental accommodation in Mumbai?

Financial options available that aid in buying a property in Mumbai
Thanks to the several financial options, buying your own house in Mumbai has become a goal the common man can aspire to achieve and work towards. Here are common financial options available to make purchasing a flat in Mumbai more accessible:

1. Home loans: Banks and financial institutions offer home loans with attractive interest rates and flexible repayment options, allowing buyers to finance a significant portion of the property's cost.

2. Government schemes: Explore government schemes such as Pradhan Mantri Awas Yojana (PMAY) and Maharashtra Housing and Area Development Authority (MHADA) for subsidised housing loans and affordable housing projects.

3. Down payment assistance: Some developers offer schemes and incentives to assist buyers with the down payment, reducing the initial financial burden.

4. Joint ownership: Consider joint ownership with family members or trusted partners to pool resources and share financial responsibilities.

5. EMI schemes: Look for developers offering easy monthly instalment (EMI) schemes or deferred payment plans, spreading the cost of the property over an extended period.

Common mistakes to avoid
It is always advisable to read, research, speak to experts, and evaluate your financial capacity before heading out in a specific direction. Often, most couples make the mistake of not being completely informed and later end up bearing the consequences.

Vacchharajani says, "Most couples make common mistakes like overextending financially for a property, not considering future expenses, neglecting to save for emergencies, and not researching thoroughly before making a purchase."

Patel lists down such common financial mistakes that married couples must avoid:

1. Overspending: Stretching finances to purchase a house beyond one's means can lead to financial strain and difficulties in meeting other essential expenses.

2. Neglecting additional costs: Failing to account for additional costs such as maintenance, property taxes, insurance, and utility bills can disrupt the budget and strain finances.

3. Ignoring future needs: Purchasing a house without considering future needs such as family expansion, career changes, or relocation can result in outgrowing the space or facing difficulties in selling the property.

4. Not researching loan options: Choosing a home loan without comparing interest rates, terms, and hidden charges can result in a higher financial burden and limited flexibility in repayment.

5. Lack of emergency funds: Not maintaining an emergency fund to cover unexpected expenses or financial setbacks can lead to stress and financial instability, affecting mortgage payments and overall financial health.

Also Read: Mumbai main ghar? Dila Dunga! How city real estate content creators are changing the way you search for the perfect home

Why investing in housing in Mumbai is a smart choice
According to Vacchharajani, "Despite environmental factors and quality of life concerns, investing in property in Mumbai is a smart choice for the long run due to the city's robust real estate market and potential for capital appreciation over time."

Adding to this, Patel states, "Mumbai's status as India's financial capital and a hub of economic activity ensures a constant demand for real estate. The city's robust economy, coupled with its strategic geographical location, fosters a favourable environment for property appreciation over time. Additionally, Mumbai's thriving job market and diverse employment opportunities contribute to its attractiveness as an investment destination, further enhancing the long-term value proposition of property ownership."

Other key reasons why newly married couples just seek to purchase a house in Mumbai include:

1. With environmental concerns such as pollution and congestion prevalent in Mumbai, the city is actively working towards implementing sustainable development initiatives and improving its infrastructure.

2. Mumbai's cosmopolitan culture, vibrant social scene, and rich heritage add to its allure as a desirable place to live and invest in.

3. The city's dynamic lifestyle, characterised by its diverse culinary scene, cultural events, and entertainment options, contributes to its enduring appeal among residents and investors alike.

4. Mumbai's real estate market offers a wide range of options catering to various budgetary preferences and lifestyle requirements. From luxury high-rises overlooking the Arabian Sea to affordable housing projects in emerging suburbs, the city provides ample opportunities for individuals to find properties that align with their investment goals and personal preferences.

By carefully evaluating market trends, considering location-specific factors, and adopting a prudent investment strategy, investors can capitalise on Mumbai's potential for long-term growth and prosperity in the real estate sector.