Here’s what the MBRI index has to offer the buyers and how it helps in decision making
The Index
MBRI assists you in dealing with the buy or rent dilemma
What’s on offer?
- Numerical values to give you a clear picture
- Quarterly updates
- Available free of cost
Where it lacks?
- Limited only to 7 cities.
- The index is a facilitator; decision to buy or live on rent is also dependant on an individual’s financial profile
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If you did not buy a house till now, the decision to buy one, or continue to live on rent is nothing short of an ordeal. The residential property market being the way it is, there is no real help at hand. So, most of us either end up taking the decision based on our understanding of the market, or on our financial ability to make a purchase.
Recently, there seem to be some ray of hope which can cast away the shadows. Realty portal Makaan.com has launched the Makaan.com Buy vs Rent Index (MBRI), a tool that aims to help property seekers take an informed choice between buying a property, or living on rent.
What type of index? MBRI represents a numerical value after considering a number of factors, such as average capital value of property, average rental value, the rental yield, the historical capital price movement, the historical rental movement and the inflation.
The index has been collated at the city as well as the sub-city level. Till date, the index covers seven cities—Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai and Pune. The current index, now, covers 32 micro markets in these cities, and aims to update it on a quarterly basis.
A low MBRI (between 1 and 20) indicates that it is much less expensive to buy a home than to stay on rental in a particular city/sub-city. Whereas, a high MBRI (25 plus) denotes that it is much more expensive to buy a home than to stay on rent. On the other hand, a numerical value between 21 and 25, by MBRI, represents the neutral range, which indicates that the final decision to buy, or take on rent should be based on the individual’s financial situation.
Is it for You? MBRI is the first index of its kind. Although, there are other indices—National Housing Bank’s RESIDEX and Liases Foras’ RESSEX—they only represent the movement in real estate capital values. The general opinion about indices, especially, in the residential property market is that the penetration and popularity is low. Says Gulam Zia, national director, Research and Advisory Services, Knight Frank (India), “People at large still rely upon simple capital values, or rental rates and find it difficult to relate with these indices.”
How important is it for you? While making a decision based on the valuation done by MBRI, you should realise that it is only a tool which acts as a facilitator to help you arrive at a decision. You cannot base your decision solely on the results thrown by this index. The index, to a great extent, takes into account the factors affecting a buyer’s decision with regard to the situation of the property market. You will also need to have a clear picture of your financial standing before you arrive at a decision. A combination of the price trend in a particular locality and a buyer’s financial status will determine his/her affordability for properties in a locality.
However, Aditya Verma, chief operating officer, Makaan.com, while putting the findings of the index rightly, says: “The findings will vary from one person to another depending on their income and savings.” He goes on to suggest that the index is meant for reference. It gives buyers an idea depending on the relation between capital values and rentals in a locality, while making a choice between buying or renting a property.
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