"Should I rent or buy?" usually gets a one-line answer: buy, rent is dead money. Or rent, property is overrated. Neither is true by default. A widely shared 2025 study found the answer swings enormously between cities, and our own model on current listings shows why: it comes down to a race between how fast home prices grow and how fast the renter's investments grow.
What the 2025 study found
In April 2025, Business Standard reported a study by personal finance firm 1 Finance Research. It compared the full cost of buying (down payment, stamp duty, registration, EMIs) with renting (deposit, maintenance, rent) in India's top ten cities, and assumed renters invest what they save. Its findings:
- In Bengaluru, Hyderabad, Pune, Kolkata and Thane, buyers could be better off than renters within 3 to 8 years, with Bengaluru at 3–5 years for a 2BHK costing about ₹1 crore that rents for ₹40,000–55,000 a month.
- In Mumbai, Delhi, Noida and Gurugram, buying may not beat renting and investing even after 30 years; a comparable Greater Mumbai 2BHK cost about ₹2.4 crore and rented for ₹55,000–85,000.
The coverage doesn't publish the study's assumptions for price growth or investment returns. Those two numbers decide the answer, so we built our own model where you can see them.
Our model: same cash, same monthly budget
We gave a buyer and a renter the same starting cash and the same monthly budget, for an illustrative 1,000 sq ft flat in each city:
- Prices and rents are each city's median asking price and rent from the Gulmohar Atlas, October 2026.
- The buyer, in the illustration, puts 25% down, pays 7% stamp duty and registration, and takes a 9% loan over 20 years.
- The renter invests the buyer's day-one cash, and each month invests whatever the buyer spends beyond the rent. Rent rises 5% a year.
- Once the loan is paid off, the owner invests what the renter still spends on rent.
- We compare their net worth each year. The buyer's counts the home's value, minus any loan left and 2% selling costs.
With prices growing 7% a year and the renter earning 8%, illustrative assumptions, here's when buying pulls ahead:
Illustration from model rent-vs-buy@1: a 1,000 sq ft flat at each city's median asking price and rent (Gulmohar Atlas, October 2026), 25% down, 9% loan over 20 years, 7% stamp duty, rent rising 5% a year, 2% selling costs. Shorter is better for buying. Illustration — inputs are stated in the text.
The sensitivity that matters
Change the two assumptions and the answer moves a lot. This is the model's output for Bengaluru (an illustration), using its median asking price of about ₹98 lakh for 1,000 sq ft and rent of about ₹29,300 a month:
| Bengaluru (illustration) | Prices +3%/yr | +5%/yr | +7%/yr | +9%/yr |
|---|---|---|---|---|
| Renter earns 6% | 27 years | 11 years | 4 years | 3 years |
| Renter earns 8% | never | never | 6 years | 3 years |
| Renter earns 10% | never | never | never | 4 years |
And across all five cities, the same picture in this illustration:
| Prices +5%/yr, renter earns 8% (illustration) | Years until buying wins |
|---|---|
| Mumbai MMR | 19 |
| Bengaluru, Hyderabad, Noida, Gurgaon | never, within 30 years |
The pattern is consistent. In the Atlas, median rents run at roughly 2.7–3.8% of asking prices a year across all five cities. At those levels, buying wins only if home prices grow roughly as fast as the renter's investments, or faster.
In the illustration, if you expect prices to rise 7–9% a year, buying looks good. If you expect 5%, and you'd really invest the difference, renting comes out ahead.
What recent price growth tells you, and what it doesn't
House prices haven't moved together. The National Housing Bank's index rose 22.8% in Gurugram over the year to December 2025, the fastest of 50 cities, against 3.7% in Mumbai, 3.2% in Hyderabad and 5.0% across all 50 cities.
Annual change in the NHB RESIDEX index at assessment prices (valuations reported by banks and housing finance companies). One year's change is not a forecast. Source: National Housing Bank, RESIDEX Q3 FY 2025-26.
A year like Gurugram's makes buying look obviously right in hindsight. But the rent-vs-buy question is about the next 10–20 years, and one strong year is not a forecast. In that same release, the 50-city index grew 5.0% a year, down from 7.2% a year earlier. Pick a growth assumption you'd be comfortable betting on for two decades, not the best recent year.
Applying it to your own decision
The city sets the starting point. Your own numbers decide the answer:
- Your actual rent and the actual price of the flat you'd buy, not city medians.
- How long you'll stay. Buying costs a lot up front (stamp duty, registration) and when you sell. A short stay rarely recovers them.
- Whether you'd really invest the difference. The renter only wins if the savings are invested consistently. Money spent instead tips the result towards buying.
- Your growth and return assumptions. Run a cautious case and an optimistic case. If you buy only in the optimistic one, you're making a bet on prices.
Our Bengaluru ₹1.8 crore loan case works through this for one real family. A Gulmohar evaluation checks a specific property's price and whether it fits your finances.
To test your own assumptions, use the free rent vs buy calculator.
Common questions
Is buying always better than renting in Bengaluru?
No. In our model, using Bengaluru's median asking price and rent, buying overtakes renting in about 6 years if home prices grow 7% a year and the renter earns 8% on investments. If prices grow 5% a year with the same 8% return, buying doesn't catch up within 30 years. The answer depends on those assumptions and on how long you stay.
Why can Mumbai and Hyderabad have different rent-vs-buy outcomes?
Because rent relative to price differs. In the Gulmohar Atlas, Mumbai's median asking rent is about 3.8% of the price a year, against about 3.5% in Hyderabad. Higher rent relative to price means owning saves more each month, so buying catches up sooner. City-wide figures also depend on which areas are included: Mumbai MMR here includes Thane and other suburbs.
What does breakeven mean in a rent-vs-buy model?
In our model it's the first year in which the buyer's net worth (home value, minus the loan still owed and selling costs, plus anything they invested) is at least as large as the renter's, when both start with the same cash and spend the same each month. It is not when you've 'recovered your EMIs'. Under some assumptions it never happens.
Sources
- Should you rent or buy a home in 2025? New study breaks it down city-wise (1 Finance Research) — Business Standard, 29 April 2025
- NHB RESIDEX press release: housing prices, Q3 FY 2025-26 (Oct–Dec 2025) — National Housing Bank, March 2026
- Gulmohar Atlas: residential sale and rental listings, five cities — Gulmohar, October 2026
Figures labelled “illustration” are worked examples with the inputs stated in the article, not market data. Spotted an error? Write to hello@gulmohar.ai and we will correct it.