Should you rent or buy a home in 2025? New study breaks it down city-wise

Is it smarter to rent or buy a home in 2025? The age-old question has a fresh answer, thanks to a new study by personal finance advisory firm 1 Finance Research. By breaking down the real costs and returns of owning versus renting in India’s top ten cities, the report offers clarity on one of the biggest financial decisions for urban Indians.

 

 How the Study Was Done

The research went beyond just comparing home prices and monthly rent. It included all costs of buying—down payments, stamp duty, registration, EMIs—and matched them against renting expenses such as deposits, maintenance, and monthly rent.

 

 

Crucially, the analysis also included the opportunity cost of capital. In simpler terms, it asked: what if renters invested the money they saved from not buying a home into a diversified investment portfolio? The "breakeven point" was the moment when the financial gains from buying (property appreciation minus costs) overtook the wealth accumulated from renting and investing.

 

The Verdict: It Depends on Where You Live

In cities like Bengaluru, Hyderabad, Pune, Kolkata, and Thane, the study found that buying wins—and relatively quickly. Thanks to affordable home prices and healthy rental yields, buyers in these cities could become financially better off than renters in as little as 3 to 8 years.

 

Take Bengaluru, for instance. A 2 BHK flat costs around Rs 1 crore, with monthly rent ranging from Rs 40,000 to Rs 55,000. If you plan to stay in the same home for more than 3 to 5 years, buying is likely to be the better long-term financial choice.

 

On the other hand, Mumbai, Delhi, Noida, and Gurugram tell a very different story. Here, renting often makes more financial sense, sometimes for decades. The sky-high property prices mean that even after 30 years, buying may not beat the wealth creation potential of renting and investing smartly.

 

In Greater Mumbai, for example, a similar 2 BHK can cost around Rs 2.4 crore, with rent between Rs 55,000 and Rs 85,000 a month. Despite the high rent, the return on investment from buying is so low that renters who invest their savings could end up far wealthier.

 

What does this means for you?

If you're in a city with steep real estate prices and low rental yields, don't feel pressured to buy just yet. Renting and investing the difference may be the smarter path to wealth. Conversely, if you're living in a city with reasonable home prices and plan to stay put for a few years, buying could pay off sooner than you think.

 

Rent vs Buy Breakeven Analysis by City and Unit Type 

 

"“Renting can be tough. Rent hikes, high deposits, rules against bachelors, and frequent moves are common issues. But buying is not always smooth either. Many buyers make rushed decisions. They might not check everything properly or settle for less space. Falling for fancy sample flats in under-construction projects can also lead to problems later. There's a smarter way to buy a home. It avoids financial stress and confusion. Consider getting help from real estate experts. They understand local growth, migration, and economic trends. It is always best to align personal finances with real estate intelligence to make rent/buy decisions," said Animesh Hardia, Senior Vice President of Quantitative Research at 1 Finance.

 

Key points: 

• Buying a home could be a smart wealth-building move if you plan to stay in cities like Bengaluru, Hyderabad, or Pune for at least 4–8 years.
• In cities with sky-high prices and low rental yields—like Mumbai or Delhi—renting usually gives you more flexibility and financial breathing room.
• Don’t just follow the crowd. Check the numbers, consider your lifestyle, and use expert insights to guide your choice.