Rising costs of living are a cause for concern, and monthly rentals across the country’s major cities have been steadily increasing by 9.2 to 21 per cent in 2024 compared to a year ago, fuelled by migration, lack of good-quality accommodation, and a premium on better amenities.
The highest increase was seen in Noida’s Sector 150, while the lowest was in Mumbai’s Chembur suburb, according to data from Anarock.
Barring Mumbai and Chennai to some extent, all other cities have seen double-digit rental growth. In Mumbai, rental increases have been just under 10 per cent, while in Chennai, growth has ranged between 9.4 and 10.3 per cent.
In Bengaluru’s Sarjapur area, rentals have risen by an average of 16.8 per cent in 2024, and in Thanisandra, by close to 11 per cent. In the National Capital Region, rentals rose by 12.2 per cent in Sohna Road and by close to 22 per cent in Noida’s Sector 150.
“Rising home rents are a reflection of strong urban housing demand, driven by economic activity and migration trends,” said Ram Naik, Co-founder and CEO of The Guardian Real Estate Advisory.
Consumer goods companies have been complaining about muted urban demand, partly due to reduced disposable income, which restricts consumers’ ability to spend on non-essentials. In cities such as Mumbai, NCR, and Bengaluru, home rents account for around half of household expenditure, leaving very little for discretionary spending.
While the desire for home ownership has surged post the Covid-19 pandemic, rentals have also risen proportionately as new houses come with advanced amenities. Demand for homes over the last 4-5 years has pushed up prices, and those who rent them out are looking to earn good returns on their investments.
Over the last three years, residential rents have risen by close to 30 per cent.
“While inflation and urban consumption patterns are factors, rental increases are also influenced by supply-demand dynamics in key locations,” said Naik.
He admitted that affordability remains a major factor but added, “The sustained demand for rental housing, especially in prime city areas, indicates that tenants are adjusting their budgets accordingly.”
With new housing supply expected to enter the market in 2025, rents are also expected to stabilise.