The economic slowdown has hit home sales and sent prices plummeting. The flip side: home rents have shot up.

Rents went up by around 30 percent in major cities including Delhi and the national capital region (NCR) last year, as more and more consumers, hit by the slowdown, preferred living in rented houses to investing huge sums to buy properties, industry officials said.

"The slowdown has fuelled the rental market. On an average, the residential rental has gone up 30 percent in the last one year in Delhi and NCR. In many areas, it went up even 50 percent," Rajesh Goenka, chairman of Axiom Estates, the London-headquartered provider of property services in India, told reporter.

Added Pradeep Khanna, chairman of Khanna Properties, a west Delhi-based brokerage firm: "The rental for a normal two-bedroom set in Delhi and NCR was about Rs.7,000 per month one year back. However, today it is very difficult to get a decent two-room set on the same rent even in remote localities."

According to industry officials, the high cost of properties and slackening supply of houses have fuelled rentals in Delhi.

"People need a house to live in, and not everyone can buy one. With prices still beyond the reach of a large section of the middle class, staying in rented accommodation is the only option left," Goenka said.

"Even the potential buyers are on a wait-and-watch mode now."

Priyanka Prasad, a jewellery designer, echoed similar views, saying she had to shift home from north Delhi to west Delhi because of high rents.

"I was paying Rs.7,500 for a two-room set in the Kamla Nagar area in north Delhi. However, this year the landlord asked for Rs.12,500. This was out of my budget, so I shifted to Dwarka, where I got a similar house for Rs.8,500," Prasad said.

The trend in the housing rental sector is just opposite to the commercial and official rental markets, where prices fell 30 percent last year, according to reports by global real estate consultant Cushman and Wakefield.

Sameer Nayar, managing director and Asia Pacific head of the real estate unit of Credit Suisse, said supply was more than the actual demand in the office rental sector.

"Office rentals are going down because the supply is more than the actual demand. However, in the residential property sector, the demand is much higher. Naturally, the rent will go up," Nayar said. 

* The views expressed by the author in this feature are entirely the author's own and do not necessarily reflect the views of SME Times.