'Live on rent': Investment banker explains why even 20 years of saving won’t buy you a home in India

Buying a home in India today isn’t just hard, it’s almost absurd. In a LinkedIn post, investment banker Sarthak Ahuja unpacks why urban real estate is slipping further out of reach for the average Indian, and what prospective homebuyers can realistically do about it.

“If you look at the Price to Income (P2I) Ratio for houses in India—or the number of years' income you have to pay to afford a house—urban cities now average a P2I of 11,” Ahuja writes. “That means 11 years of full income. And if you assume 50% of your income goes into expenses, that's over 20 years of savings.”

He adds: “This P2I ratio is similar to New York, one of the most expensive real estate markets in the world.”

Ahuja lists three reasons why Indian housing has become unaffordable:

1. Outdated building rules
“India has a very low FSI or Floor Space Index. Most metros have an FSI of 1.3 to 3.5, which keeps building heights low. More land is needed to house the same number of people.” By comparison, the average FSI in the US is 15; in Singapore, it’s 25.

2. Artificial scarcity by developers
“Private developers play a dirty game,” he says. “They’ll release only 5 units for sale in a 100-unit project to set inflated prices through scarcity. The next 5 go for 10% more. This keeps the illusion of demand high while pushing up rates.”

3. Real estate as a cash parking tool
According to Ahuja, a significant chunk of India’s real estate is driven by black money. “It is said that less than 10 families own 20% of the land in Mumbai, and 500 families own half of Mumbai.”

As for advice? “Buy a house when you can afford at least 50% upfront, and keep EMIs under 35% of your in-hand income. If not, live on rent and build income. Tier 2 cities may be a smarter option than metros.”