7 hours Ago
The age-old dilemma of whether you should rent or buy your home, has taken a new turn, as a fresh study by 1 Finance sheds light on the city-specific economics of real estate ownership across India. The verdict? In some cities, buying pays off in just a few years. In others, renting is the wiser bet, even for decades.
"Renting can be tough. Rent hikes, high deposits, rules against bachelors, and frequent moves are common issues. But buying isn't always smooth either.
Many buyers make rushed decisions. They might not check everything properly or settle for less space. Falling for fancy sample flats in under-construction projects can also lead to problems later," says Animesh Hardia, senior vice president of Quantitative Research at 1 Finance.
The research unpacks real estate's performance alongside other asset classes, examines opportunity costs, and identifies how long it takes for owning a home to become more financially rewarding than renting. Buy vs Rent: The City-Wise Break-Even Math In cities like Bengaluru, Hyderabad, Pune, Kolkata, and Thane, the cost of buying a 2 or 3 BHK home can be recovered in as little as three years. However, in Mumbai, Delhi, Noida , and Gurugram, the high property prices stretch the break-even period to over 30 years.
Take Bengaluru: a 2 BHK costs around Rs 1 crore and rents for Rs 40,000–Rs 55,000 a month. Here, ownership beats renting in about 3–5 years. Contrast that with Mumbai, where a comparable flat costs Rs 2.
4 crore but rents for Rs 55,000–Rs 85,000, a gap so large that renting wins out for the foreseeable future. Why Context Matters? The report mentions that buying a house requires upfront costs, downpayment, stamp duty, registration and equated monthly instalments (EMIs). Renting comes with deposits, monthly rent and maintenance.
But the tipping point is what the tenants do with the money they save: If they invest it wisely, sometimes the returns can be greater than the gains from owning. Hardia adds: “There’s a smarter way to buy a home. It eliminates the stress and confusion over money.
Perhaps you could use some help from real estate professionals. ‘It is all too easy to get carried away by emotion when you buy property, particularly on completion projects where they love to show you those fancy sample apartments but forget about the long-term perspective,” Hardia adds. Real Estate Vs Other Investments 1 Finance compared the returns for an investment of Rs 50 lakh across asset classes over the last 10 years.
Theresults underscore the importance of location in determining returns to real estate: Gurugram, significantly, has beaten equity and gold both, while Greater Mumbai trailed due to the high entry price and moderate appreciation. The decision of whether to rent or buy a home absolutely comes down to how long you plan to stay, which city you’re in, and how responsibly you handle your money. For those who are purchasing in fast-growing cities with reasonable property prices and good rental yields, homeownership could build wealth in only a few years.
But in high-priced metros, renting can offer more financial flexibility. This isn't a one-size-fits-all decision. As Hardia put it, “It is always best to align personal finances with real estate intelligence to make rent/buy decisions.
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