Rent or buy? Start with one number: what rent is as a share of the price

The rent-or-buy debate usually turns into an argument about whether prices will keep rising. A faster way in is a single number you can look up for any locality: the annual rent as a share of the price. It tells you what the money would earn if you owned the flat and rented it out, and it is the yardstick for what you give up by buying to live in it.

What the Atlas says

Across the Gulmohar Atlas (October 2026), median gross rents run at about 2.7% of the asking price a year in Gurgaon and 3.8% in Mumbai MMR.

For a flat of 1,000 sq ft, the Atlas's Gurgaon medians are an asking price of about ₹1.43 crore and a rent of about ₹31,900 a month, which, in our calculation, is about ₹3.83 lakh a year.

Now put a loan next to it

In a worked example, take a 75% loan on that flat at 9% over 20 years, an illustration. The loan is about ₹107 lakh, the EMI about ₹96,600, and the interest in the first year alone about ₹9.6 lakh, about 2.5 times the year's rent. In the early years of a loan most of each EMI is interest, so the gap between owning and renting is large at the start.

That does not make buying a mistake. It means the monthly maths favours renting, and the case for buying has to come from somewhere else.

Where buying wins

In our model (rent-vs-buy@1), the buyer and the renter start with the same cash and spend the same each month; whoever spends less invests the difference. The renter's savings earn 8% in this illustration, and rents rise 5% a year. For a Gurgaon median flat, buying overtakes renting after 12 years if prices rise 7% a year. At 9% price growth it overtakes after 4 years. At 3% or 5% it did not overtake within 30 years.

Two things stand out. The answer is very sensitive to price growth and to what the renter's savings earn. And a forecast of price growth is the one input nobody can know in advance. Our city-by-city grid shows how it moves.

A short decision rule

• If you will stay only a few years, rent. In our model buying needed about four years to catch up even at 9% price growth, and much longer at slower growth.
• If you will stay ten years or more and you value control and stability, buying can be right even when the monthly maths favours renting, as long as you can afford the EMI through an income dip.
• If your only reason is "rent is dead money", check the number above first. The interest on a loan is a cost too.

What this number cannot tell you

Rent as a share of price says nothing about the property itself: whether its price is fair, whether the project is registered, or whether you can afford the cash. Those are separate checks, covered in our guides on how much home you can afford and whether the asking price is fair.

To test your own assumptions, use the free rent vs buy calculator.