The Real Cost of Homeownership in Major Indian Cities
Buy or Rent? Making the Right Choice in India’s Big Cities
Buying a home is one of the biggest financial decisions you'll ever make—and also one of the most emotional. In cities like Mumbai, Delhi, or Bengaluru, where real estate prices are sky-high, many people wonder: Is it better to buy a house or just rent one?
There’s no one-size-fits-all answer. What works for one person might not work for another. At Nobias, we believe in cutting through the noise—no pressure, no “log kya kahenge” thinking. Just clear, data-backed guidance to help you make the choice that fits your life and your money.
In this blog, we break down the pros and cons of both options so you can make a confident and informed decision.
Buying Your First Home? Here's What You Need to Know About the Initial Costs
A modest 2-bedroom hall kitchen (2 BHK) apartment in a mid-range locality in a Tier 1 city can cost anywhere between ₹1 crore and ₹3 crores. When you decide to purchase or reserve such a property, you're required to make an initial payment known as a down payment—typically around 20% of the property's value. This means you may need to set aside anywhere from ₹20 to ₹60 lakhs, depending on the price and your loan structure.
But that’s not all.
You’ll also have to account for stamp duty, which is a mandatory charge for registering the property. This can range from 5% to 8% of the property value, depending on the state. Additionally, there may be brokerage fees, legal charges, and other incidental costs.
All these expenses combined lead to a significant upfront financial commitment. For many, this ties up a large portion of their available cash—leaving limited flexibility for other important goals such as travel, investing for the future, or even starting a business.
The Rising Cost of Ownership in Metro / Tier 1 Cities
It may sound odd, but in many cases, renting a home is much more affordable than buying one— especially in expensive cities like Mumbai, Delhi, or Bengaluru. For the same property, the monthly rent is often far lower than the EMI (loan repayment) you’d have to pay if you bought it. This means you could live in the same kind of home, in the same area, but with much less financial pressure each month, leaving you with more money to spend, save, or invest elsewhere.
Buying v/s Renting in Major Indian Cities
From the above it can be seen that a property worth ₹1 crore might only earn ₹2–3 lakhs a year in rent. This means that the rental yields are usually quite low, often just 2% to 3% per year.
This mismatch makes renting favorable as the same property usually costs significantly less each month than paying an EMI had you bought it.
Renting also allows you to keep your money available for other priorities like travel, investments, or building a business, instead of tying it up in a long-term home loan. In short, low rental yields make renting a more efficient and flexible financial choice for many people.
The Opportunity Cost of Buying vs Renting
Let’s say you are considering a ₹1 crore home in Bengaluru. You’ll need about ₹20 lakh upfront as a down payment. If instead you invest this ₹20 lakh in a diversified mutual fund portfolio, and it grows at 12 percent annually, you’d have roughly ₹1.1 crores in 15 years.
Meanwhile, the same house may appreciate at 5–6 percent annually (real estate growth varies greatly by location and demand). After 15 years, it might be worth around ₹2.3 crores—but this is before adjusting for costs like property tax, maintenance, and repair.
In contrast, the investment portfolio is liquid, tax-efficient (with indexation or LTCG benefits), and doesn’t involve additional costs or upkeep.
What About the Emotional Value of Ownership?
Buying a home brings a sense of permanence and emotional security. In Indian families, it’s still viewed as a life milestone—a place to call your own, to raise children, or retire in.
But it’s important not to confuse cultural conditioning with financial readiness. Many first-time buyers are emotionally pushed into buying too early, which can result in:
Long-term EMIs that strain monthly cash flows
Limited career mobility due to being tied to one city or job
Delayed goals like starting a business, upskilling, or taking a sabbatical
Ask yourself: Are you buying because it fits your life plan or because it fits someone else's idea of success?
Tax Benefits Are Not a Free Pass
Yes, Indian tax laws offer benefits on home loans under sections 80C (principal) and 24(b) (interest). But these should not be the sole reason to buy a home. If the interest you pay is ₹6 lakh per year and you get a ₹2 lakh tax deduction, you’re still paying ₹4 lakh in net interest.
In contrast, the money saved on rent and not spent on down payment could be growing in the market- without tying you to one asset for decades.
Renting Works Well in Certain Life Stages
You should consider renting if:
You are early in your career and might switch jobs or cities
You want to explore different neighbourhoods before settling
You need to stay nimble for professional or personal goals
You want to invest surplus funds in a diverse portfolio rather than one illiquid asset
Buying Makes Sense If…
You plan to stay in the same home for 10 years or more
You have a stable income and surplus even after EMIs
You are buying not just for living, but also for generational wealth transfer
You are getting a good deal, such as a distress sale or under-construction project from a reputed builder
What Nobias Suggests
The decision should be based on data, not emotion. At Nobias, we recommend running the numbers using your actual salary, expenses, and goals. Link for Buy vs Rent Calculator
Here’s are 3 thumb rules to check:
If your monthly EMI is more than 1.5 times the rent of a similar property, renting is likely more efficient.
If the total cost of buying (including interest and taxes) is significantly higher than the rental + investment return route, hold off on buying.
Consider liquidity. Can you afford the down payment and still maintain your emergency fund and lifestyle?