For most Indian buyers, no. House prices across eighteen major cities rose 2.2% in the year to Q2 2025-26, against 7.0% a year earlier, on the RBI’s own House Price Index released 27 November 2025. That is below what a bank fixed deposit paid over the same stretch. Property still works for two people: the leveraged buyer who holds for a very long time, and the buyer who was going to pay rent anyway. It works badly for almost everyone else, and the costs are where it goes wrong.
What have Indian house prices actually done?
| Measure | Figure | Applies to | Source |
|---|---|---|---|
| All-India house price growth, year on year | 2.2% | Q2 2025-26 | RBI House Price Index, released 27 Nov 2025 |
| Same measure a year earlier | 7.0% | Q2 2024-25 | Same |
| Quarter-on-quarter change | −0.6% | Q2 2025-26 | Same |
| Cities covered | 18 | Transaction data from registration authorities | Same |
| Index base year | 2022-23 | All-India index | Same |
| Lowest advertised home loan rate | 7.20% p.a. | Floor rate, as of 15 Aug 2026 | Lender rate cards |
Two things about that index. It is built from actual registered transactions, not from asking prices in listings, which is why it reads lower than developer marketing. And it is a national average across eighteen cities. Your micro-market can beat it or lag it badly, and within one city the spread between two suburbs can be larger than the national number.
Check the RBI’s database for later quarters before you act on this. The release above is the one we could verify.
Why do the costs matter more than the price?
Because they are large, they are paid up front, and they never come back. A property purchase carries stamp duty and registration in your state, brokerage, legal fees, and GST if the flat is under construction. Add furnishing you would not otherwise have done.
Then the holding costs run every year. Society maintenance. Municipal property tax. Repairs. Insurance. Vacancy between tenants, which is a real cost even though no bill arrives. And your own time chasing all of it.
Now the exit. Brokerage again. Capital gains tax, at 12.5% on a long-term gain, with slab rate if you sell within 24 months. The buyer deducts 1% TDS where the price is ₹50,00,000 or more. Work the full round trip in capital gains on property before you assume a profit.
An equity index fund has none of this. No stamp duty at 5% or more, no maintenance, no tenant, no broker at the exit. That difference is worth several percentage points a year, and it compounds against the property for the whole holding period.
The one honest test: rental yield against your loan rate
Divide the annual rent by the price you would pay. That is your gross rental yield. Now compare it with the interest rate on the loan funding the purchase. Home loan floors start at 7.20% a year, as of 15 August 2026, and most buyers pay more than the floor.
If the gross yield is below your loan rate, the rent does not cover the interest. You are funding the gap out of salary, betting entirely on price appreciation. That may still work. But you should know that is the bet you have made. Run it on the rental yield calculator.
Net yield is lower again. Take out maintenance, property tax, repairs and vacancy and the gross figure falls by a meaningful margin. Almost every yield quoted to a buyer is a gross figure.
So why does property still beat equity for some people?
Leverage, and behaviour. Those are the two real advantages, and neither is about returns.
Property is the only asset an ordinary salaried Indian can buy with mostly borrowed money at a single-digit rate. RBI ties the loan-to-value cap to ticket size, broadly 90% up to ₹30 lakh, 80% from ₹30 to 75 lakh, and 75% above that. A 6% price rise on a property where you put in 20% is a much larger return on your own money. Nobody will lend you 80% to buy an index fund at 7.20%.
The catch is that leverage is symmetric. The same maths runs in reverse in a flat or falling market, and 2.2% national growth is close to flat. Meanwhile the EMI does not pause.
The behavioural point is less flattering but more true. People do not sell property in a panic, because selling takes months. They do sell equity in a crash. A worse asset held for twenty years often beats a better asset sold in year three. If you know you will bail out of equity, property’s illiquidity is protecting you from yourself. That is a real advantage. It is not a return.
What about the home you live in?
It is not an investment. It is consumption you happen to own. You cannot spend it without moving out, and the money released by selling has to go into another roof.
The right comparison there is rent versus the cost of ownership, not property versus equity. Compare the rent you would pay against the interest, maintenance, property tax and the return you forgo on the down payment. Our rent versus buy calculator runs that, and the answer swings sharply on how long you stay. Under about five years, renting usually wins, because the entry costs have not been amortised.
How should you own property if you decide to?
| Item | Details |
|---|---|
| Buy ready, not under construction. | Delay risk is the largest uncompensated risk in Indian residential property, and GST applies to under-construction sales. |
| Buy where you can verify the rent. | If nothing comparable is on rent nearby, the yield you were quoted is a guess. |
| Check the state’s stamp duty before you budget, | not after. It varies widely and it is your single largest entry cost. The stamp duty calculator has the state rates. |
| Budget for the annual municipal tax | in the city you are buying in. Rates and billing differ by corporation, and our property tax by city page sets out the differences. |
| Consider a listed REIT instead | if what you want is exposure to real estate income rather than a specific flat. It is SEBI-regulated, traded, divisible, and it does not need a tenant found by you. |
Frequently asked questions
Is property a better investment than mutual funds in India?
On the national data, recent house price growth has been low single digit, and property carries entry, holding and exit costs that a fund does not. Property’s edge is cheap leverage, which no fund offers. If you will not use leverage, or you will not hold for a decade or more, a fund is the simpler choice.
What rental yield is good in India?
There is no fixed threshold worth quoting. The test that matters is whether the gross yield clears the interest rate on the loan buying the property. Home loan rates start at 7.20% a year as a floor. If your yield is well below your rate, the purchase depends on price appreciation alone.
Are house prices in India falling?
The all-India index fell 0.6% between Q1 and Q2 of 2025-26, and annual growth slowed to 2.2% from 7.0%. Some cities in the index declined outright. That is a slowdown in the national average, not a crash, and city-level outcomes differ a great deal.
Does a home loan tax benefit make buying worth it?
It reduces the cost. It does not make a bad purchase good. The deduction is worth your marginal tax rate applied to the interest, and only under the old regime for most heads. A property that loses money before tax still loses money after it.
How long should I hold property to make it work?
Long enough for the round-trip costs to be absorbed by appreciation and rent. Entry and exit costs together commonly run into several per cent of the price, so a short hold rarely clears them. The gain also becomes long term only after 24 months, which changes the tax rate.
Sources
- Reserve Bank of India, House Price Index press release for Q2 2025-26, released 27 November 2025. rbi.org.in. Read 7 September 2026.
- Credsir rate data set — home loan floor rates, as of 15 August 2026; capital gains and TDS tables, as of 17 August 2026, sourced from the Income Tax Department.
- RBI loan-to-value caps for housing loans, as summarised on our best home loans page.
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