Homeownership in India: A Wealth-Creating Investment or Emotional Purchase?
A social media thread by CA Nitin Kaushik has reignited the debate around whether buying a home in India is truly a wealth-creating investment or simply an emotional purchase disguised as an asset.
The Real Return Calculation
According to Kaushik, many homeowners overestimate the actual returns generated from residential apartments after accounting for hidden costs such as stamp duty, maintenance charges, property taxes and inflation.
- Stamp duty: 6%
- Society maintenance expenses: Varying amounts
- Annual property taxes: Varying amounts
Using a hypothetical example of a flat purchased for Rs 80 lakh in 2015 that is currently valued at around Rs 1.2 crore, Kaushik calculated the effective acquisition and holding cost to be closer to Rs 95 lakh.
He argued that the increase from Rs 95 lakh to Rs 1.2 crore over a decade translates into an annualised return of only around 2.3%, which is lower than long-term inflation in India.
“In real terms, your purchasing power actually shrank,” he noted, suggesting that homeowners may feel wealthier on paper while failing to generate meaningful inflation-adjusted returns.
Equity Markets vs Residential Property
Kaushik compared residential property returns with equity market performance over the same period.
- Nifty 50 index fund: Investment could have grown to over Rs 2.2 crore by 2026
- Opportunity cost: Locking capital into residential real estate with limited liquidity and recurring expenses
Apartments vs Land
Kaushik argued that apartments behave like depreciating assets because buildings deteriorate over time and require continuous spending on repairs, maintenance and upgrades.
- Depreciation: Buildings lose value over time
- Continuous spending: Repairs, maintenance and upgrades required
Instead, he advocated investing in land parcels located in emerging growth corridors, citing lower holding costs and stronger long-term appreciation potential.
- Lower holding costs: Reduced expenses
- Stronger long-term appreciation potential: Higher returns
Emotional Value
Despite his criticism of residential apartments as investments, Kaushik clarified that buying a home for self-use is entirely valid.
“If you need a roof over your head, buy one,” he said, while cautioning people against justifying large EMIs by assuming automatic wealth creation.
Conclusion
The viral discussion has once again highlighted the changing mindset among urban Indian investors, many of whom are increasingly evaluating assets based on liquidity, inflation-adjusted returns and long-term CAGR rather than traditional notions of homeownership.