In India’s bustling property markets, buying a home has traditionally been seen as a vital investment. However, financial advisor Lovish Anand is challenging this norm, particularly when it comes to high-cost areas such as Mumbai, Delhi NCR, Gurugram, Noida, and Pune.
According to Anand, these cities require homeowners to stay put for over 30 years just to break even, substantially lengthening the financial commitment. “That’s not an investment,” Anand wrote in a LinkedIn post. “That’s a slow bleed.”
The root of the issue lies in exorbitant property prices paired with rental yields that are often below 2%. This combination makes renting a financially appealing option compared to buying. In contrast, cities such as Bengaluru, Hyderabad, Thane, Kolkata, and Chennai present a more favourable scenario, where rental yields exceed 4% and breakeven periods for buying can be as short as 3 to 8 years, especially for two-bedroom units.
“The numbers don’t lie,” Anand noted. “In cities where rent is just 2-2.5% of the home’s price, buying makes little sense unless you’re locking in for life.”
Anand highlights that this insight should prompt a reevaluation of the age-old view that renting is merely money wasted. His advice is to critically assess the financial implications rather than relying on traditional beliefs. “Don’t buy because your uncle said so. Don’t rent because it feels safer. Run the numbers. Know the breakeven. Think long term before you lock in,” Anand said.
The emotional appeal of homeownership often overshadows the stark financial realities, according to Anand. This sentiment is further bolstered by a comparative study conducted by 1 Finance, which analyses various financial factors such as EMIs, stamp duty, and opportunity costs. “Real estate isn’t about emotions,” he concludes. “It’s about math.”
Anand’s message resonates strongly with those reconsidering their financial priorities in rapidly evolving urban landscapes. He states, “Your dream home could be your worst investment depending on the city,” highlighting how location significantly influences the financial outcome of property ownership.
In his full LinkedIn post, Anand expands on these insights, cautioning against outdated advice such as “Buy a home as soon as you can. Rent is just money down the drain.” Instead, he suggests potential homeowners should focus on the financial data before making decisions.