When an average Indian thinks about investing, the first thing that often comes to mind is buying a home. Many people dream of owning a flat or apartment in major metro cities such as Bengaluru, Mumbai, Chennai, Delhi, and Gurugram. But is it really worth buying a home in these cities? A recent LinkedIn post by financial analyst Sujay U has sparked a discussion on why people are so obsessed with certain cities, even when some of them may not be financially beneficial or yield significant returns.
Which cities should we avoid buying a home?
Financial expert Sujay Yu has, in a post on LinkedIn, argued that for urban Indians today, renting is more profitable than buying a home. According to him, renting is less burdensome and offers a better lifestyle. He added that buying a home in major Indian cities like Mumbai and Bengaluru is no longer the “golden ticket to wealth creation.”
Sujay U’s data-backed post dismantles the old notion that buying property alone will make you rich. He argues that real estate prices in cities like Mumbai and Bengaluru have risen so high that they are beyond the reach of the average person. His data suggests that in these cities, investing money elsewhere is a much smarter decision than tying it up in property.
Homes available for crores
Sujay said, “Today, a 2 BHK flat costs ₹20-22 million in Mumbai and ₹12-14 million in Bengaluru. Compared to an average annual family income of ₹20-30 million, the home costs 8 to 12 times the family’s income, while the global norm is 3 to 5 times. This is why buyers are falling into the “EMI trap.”
Home loan- The EMI Trap!
What has to be noted is that the EMI for a ₹2 crore flat is more than ₹1.4 lakh per month, which takes up 50–70% of a typical family’s income. Experts suggest spending no more than 30% of income on housing.
Property returns are also low. According to various reports, in Mumbai, property prices fell by 1% between 2013 and 2023. Across India, real estate prices have grown by only about 3% per year since 2010. Rental returns are very low too, at just 2%, one of the lowest rates in the world.
