It takes 8 years' savings to buy home in Mumbai, Delhi

Are you looking at buying a house in Mumbai or Delhi? You will need to save for at least eight years to be able to afford the downpayment. The same reduces to six years if you are looking to buy a house in Chennai.

Whereas for a house in Kolkata and Bangalore, you need to save for five years. And you need minimum four years of saving to downpay for a house in Hyderabad and Pune. The average property prices translate to the number of years professional needs to save for the corpus for down payment. A professional from Hyderabad and Pune needs to save two fold to be able to buy a home in Mumbai and Delhi NCR.

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It is assuming a 20 per cent of property price as the down payment and a saving rate of 25 per cent for a professional with a gross income of eight lakhs. Whether you are looking to buy or rent a place you will find both Hyderabad and Pune to be most affordable.

In comparison, Bangalore is the third most affordable city to rent and fourth affordable city to buy a house. And Chennai ranks fourth on the affordability to rent, fifth on affordability to buy. Delhi and Mumbai are least affordable places on both fronts.

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The average property price in Kolkata is less than that of Bangalore and Chennai but the rental values are higher. This is according to a study done by personal finance service company Artha Yantra on buying versus renting a home in Delhi NCR, Mumbai, Bangalore, Hyderabad, Kolkata, Chennai and Pune.

The main objective is to quantify the buy versus rent decision from a personal finance perspective. ArthaYantra developed a proprietary composite score 'ArthaYantra Buy versus Rent Score' to address the debate.

Other key findings of the research show that the rent to buy ratio, compares the monthly cost of renting a home to the monthly cost of owning the same place, at 0.41 shows that the rental values in Kolkata are higher and makes it an 'immediate buy'.

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The ratio of 0.33 for Hyderabad and Pune gives ownership of house an advantage over renting. Chennai has recorded the highest rise in the index value followed by Pune, Kolkata and Mumbai and Delhi NCR region. The index value of Bangalore recovered steadily from its dip in 2009.

The current index value of Hyderabad recorded a decline, resulting in cheaper residential properties. The average square feet per lakh determines the amount you need to pay for the desired area. At 26.57 sq ft per lakh, Hyderabad gives highest value for money compared to other six metros.

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It is followed by Pune, Kolkata, Bengalore and Chennai. Delhi NCR and Mumbai offer the least sq ft per lakh value. The annual out of pocket costs in case of renting include the monthly rent, maintenance charges and tax. The annual out of pocket costs in case of ownership include the monthly EMI, the maintenance charges and tax.

The values have been calculated and compared across the average loan tenure of 15 years. The year at which the annual costs match determines the minimum stay period in the house. The minimum stay period is 12 years for Kolkata, 14 years for Pune and Hyderabad, 15 years for Mumbai and above 15 years for Delhi NCR, Bengaluru and Chennai.

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The tax benefits received under the HRA allowance dominate the tax benefits received in case of ownership over the period of 15 years. The monthly rent value to equated monthly installment comparison defines the duration of stay in the house.

Most of the costly personal financial decisions made by the consumers during this period either involves buying something they could not afford, EMI's that are too high or living beyond the means. ABRS suggests the best recommended action given the rental value, EMI to be paid and the gross income.