Rent or buy a house in India: the price growth that decides

"Rent is dead money." Every Indian family has heard it. But the EMI is mostly interest for years, stamp duty never comes back, and the down payment could have been invested instead.

So which leaves you richer? We ran a ₹1 Cr flat through our rent-or-buy calculator to find out.

The two paths, set up fairly

Buy: pay 20% down plus 7% for stamp duty, registration and other costs, ₹27 L in all on day one. Borrow the rest at 8.5% for 20 years, an EMI of ₹69,426. Pay 0.5% a year in maintenance and property tax.

Rent: pay ₹30,000 a month, rising 5% a year. Invest the ₹27 L you didn't spend on day one, and every month invest the gap between the EMI and the rent. Investments earn 11% a year.

Both paths spend the same cash every month. The only question is what you own at the end.

Who ends up richer

The main reason is rental yield. The flat rents for ₹3,60,000 a year, just 3.6% of its price, while the loan costs 8.5%. Living in the home is cheap to rent and expensive to own, so the renter has lakhs more to invest every year. In big cities rental yields are often only 2–3.5%, which tilts it further towards renting.

The price growth that flips it

Everything turns on how fast the home's price grows.

• Below 8.4% a year: renting and investing ends ahead.
• Above it: buying ends ahead, because the whole ₹1 Cr is growing, not just your down payment.

The RBI tracks home prices across big cities using banks' home-loan data.^[1] Its all-India index rose only about 2–3% a year in its recent readings^[2][3], well below the break-even. Some cities and boom years have run far faster, and your flat isn't the average. That's why you should use your own city's numbers.

Reasons to buy the numbers don't count

• Security. No landlord asking you to leave, no rent hike every 11 months.
• Forced savings. An EMI is hard to skip; a SIP is easy to stop. The renter only wins if they actually invest the difference.
• Freedom to change the home. Renovations, pets, schools nearby for 15 years.

These are real. Just know what they cost you in rupees before you decide. If you do buy, the home loan EMI calculator shows how fast the principal falls.

What this doesn't mean

• Your city differs. Rental yields, stamp duty (5–7% in most states) and price growth vary a lot.
• Returns aren't steady. 11% is a long-run average for equity-heavy investing, not a promise.
• Tax matters. In the old regime, home-loan interest earns a 24(b) deduction, which helps the buyer. The calculator includes it.

Buyer's net worth: home value after 2% selling costs, minus the loan left, plus any investments. Renter's: investments after LTCG. Rent rises yearly; investments compound monthly. New tax regime. For illustration only, not investment advice.