Renting Vs Buying In 2025: What Makes Sense For Your City?

As more Indians migrate to urban centres in search of jobs and better lifestyles, the question of whether to rent or buy a home becomes increasingly important. In 2025, the answer depends not only on personal financial situations but also on where you live.

Recent data from ANAROCK Research shows that rental and capital values have moved very differently across Indian cities in the last few years, making the decision highly city-specific.

Where You Live Influences the Decision

According to Dr. Prashant Thakur, Regional Director & Head, Research at ANAROCK Group, rental values have increased significantly in cities like Bengaluru, Pune, Kolkata, and Chennai between the end of 2021 and the first half of 2024. In contrast, capital values — the cost of buying a property — grew at a slower rate in these cities.

For example, in Bengaluru's Sarjapur Road, rents rose 67% while capital values went up 54%. In Pune's Wagholi, rents increased by 60%, but capital prices only rose by 30%.

Meanwhile, in cities like Delhi-NCR, Mumbai (MMR), and Hyderabad, capital values grew faster than rental values. For instance, Noida’s Sector-150 saw property prices more than double (126% rise), while rents grew 56%. Similarly, in Hyderabad’s Gachibowli, capital values rose by 70% compared to a 50% jump in rents.

This kind of data can be a useful starting point for making a rent-versus-buy decision, though it’s not the only factor to consider.

Real-Life Example: Bengaluru

Imagine a professional in Bengaluru paying Rs 50,000 per month in rent for a 2 BHK flat worth Rs 1.2 crore. Over one year, this rent adds up to Rs 6 lakh. Over 10 years, with a 7% yearly rent increase, the total rent paid would be around Rs 83 lakh — about 69% of the property’s cost. This is money spent without building any ownership.

Dr. Thakur explains that if this person instead chooses to buy the property through a home loan (with 20% down payment and 9.5% interest for 10 years), they would be building equity in a physical asset. In the end, the person owns the home, instead of just having paid rent for a decade.

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Why People Still Choose to Buy

During the COVID-19 pandemic, many Indians, especially millennials who earlier preferred renting, realised the importance of having a home of their own.

The trend toward homeownership has remained strong even after the pandemic. In today’s uncertain times, a house is seen not only as a place to live, but also as a stable, long-term investment.

Moreover, EMI payments are increasingly being viewed like SIPs (Systematic Investment Plans), helping people build ownership over time, unlike rent, which is purely an expense.

Financial Incentives to Buy

Interest rates on home loans are still relatively low, ranging from 8.75% to 9.5%. In addition to this, there are several tax benefits for homebuyers in India, including: Deductions on principal repayment and stamp duty/registration costs, Deductions on interest paid on home loans, Extra Rs 50,000 deduction for first-time homebuyers and Special benefits for women buyers.

Bottom Line: One Size Doesn’t Fit All

Renting or buying is not a one-size-fits-all decision. As Dr. Thakur points out, “There is a lot to unpack when deciding whether to buy or rent a home, and investment rationale alone will not guide all such decisions.” Each individual must assess their financial situation, life goals, and the real estate market performance in the city they are considering.

If you are planning to stay in a city long-term, have a stable job, and can afford the down payment and EMI, buying may make more sense, especially in cities where capital values are rising. But if you are unsure about settling in one place, renting may offer the flexibility you need.

In 2025, the right choice depends on both your circumstances and your city’s real estate trends.