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A decent 2 bhk cost atleast 50+ lakhs. High interest rates, economy slow down, Fear of recession, everything has coupled together.

a common man can now way think of buying a flat. In case he does he will end up his entire life paying only EMI. Fear of job security
are making things more difficult for home buyer.

If we leave aside the emotional aspect of own house, do you think Renting makes sense?

http://www.wealthucreate.com/2012/02/is ... young.html

I am of the opinion unless you dont have 40% cash in hand to give down payment, buying makes no sense.

Give your opinion. when rental property is available at less than 3% of buying price, does it make sense to go with rent for now?

Just for rental income, it doesn't make any sense.
If its for pesonal use, you can buy anytime based on your financial capacities.

I think what amit is asking is whether living as a renter for now makes sense or whether buying a house to live in makes sense.

The cost is high no doubt. There are a lot of speculators in the market and they will have to sell at some point. But the infrastructure is limited to certain areas only and this will not expand rapidly. Hence it may make sense to buy in a "good" area. Renting in the short term is also an option.

I think it depends where you want to stay?, if you want to stay in hot spots...you pay larger rent, in that case it better to go for a loaned flat isnt it? however, I think you believe right, one has to have 50% down payment, else you will pay heavy EMI stretching every single month for next 15-25 yrs, when will you live your life? You don't need struggle to compromise life and make property for your kids...Be selfish live your life NOW. I think one need to Dream Big but one has to also have common sense.

The cost of flats will also be costlier in posh areas. I feel for now it makes sense to go for rent. Probably if RE softens we can go for own flat.
People have been talking about RE bubble about to bust. It has remained only in talks but not in action.

And, in my humble opinion, it shall remain in talks, amit_pearl2. Note that the RE downtrurn that we saw earlier was due to great disparity in RE prizes in Bangalore and the rest of the Metros in India. But over the last few years, the RE across India has had a steady upturn and prices are more or less at par with each other. This could be taken as the new base. If at all it rises drastically from here, the max it will fall back to will be these levels.

Guys, I did the same mistake when I decided to rent way back in 2003. Renting has always been attractive compared to owning at any point of view. Unfortunately that is a short term perspective. If you look in the long term, rent as well construction cost and land price go up. As a result e.g. in my own case in 2003. I could buy an old house (in fact almost finalized) for 21 lakhs (30x45) in Hanumanth Nagar in May 2003. If I had gone for 15 lakhs loan on site and another 10 lakhs for a duplex house total loan would have been 25 lakhs. With 15 year EMI at 8.5% would have come to appox 25K per month. That would mean an interest of 13k per month. I could rent an excellent 2BHK for only 7k per month. You can see what blunder I did. I would have cleared all the loans by now - as a friend of mine did and property worth would have been at least 75 lakhs.

My suggestion is this: Rent a house, buy two plots one where you think it will develop and good schools are around, another which is available for real cheap. Wait for 5-6 years and close the loan for both the sites and then sell the second one and build your own house. Where you buy the two sites is dependent on how much you can afford. Buy only if you can afford 30% from your savings. ...my two cents.

I feel what Nagsbhat said is correct at the present scenario, ie when RE is growing up drastically than other goods or services. But always think that there is a saturation point for RE too. So once we are there then the growth will be normal and proportional to the anything else. So basically I believe at least now buying a house is better option than staying in a rented one .

I agree that in 2002/2003 or may be earlier than this, was good time to invest in RE. Now we are all sitting on a big bubble about to bust any day.
The calculation what Nagsbhat showed us does not make sense now. Now the interest rates are very high and so are property prices.

Real estate, Gold and Oil are all cyclical in nature. Already we have seen Crude Oil had touched USD135 two years back and fell back to USD24. Last year it bounced back to USD 70 and Now again due to crisis in Libya, Iran...etc it is around now USD120. Same way You can see the state of Real estate status in US, Europe and Japan.
Due to the effect of recession 2002 onwards, Prices have fallen back to the rates of 1990's and unable to climb up since last 4-5 years. Also the interest rates in American Banks are ZERO. In Japan You have to pay to the bank to keep your savings. This is the state of economy there in the so called developed market. Presently you can buy a very descent property in USA at the price of Indian Metro cities Now. Now people doesn't have any craze in real estate there.

Now in emerging markets Real estate is a Big thing. Over a period of time, it happens here also.