Saved for 20 Years, Still Can’t Afford a Home in India: Investment Banker Explains Why
Saved for 20 Years, Still Can’t Afford a Home in India: Investment Banker Explains Why
With real estate prices soaring and outdated policies in place, saving for two decades may still not secure a home in India, warns Sarthak Ahuja.
In a compelling LinkedIn post, investment banker Sarthak Ahuja has laid bare the harsh truth behind India’s urban housing crisis, urging aspiring homebuyers to reconsider their financial strategies. His analysis suggests that for many Indians, buying a home in a metro city is no longer just difficult—it’s nearly impossible.
Urban Housing Crisis Mirrors Global Metros
Ahuja highlights the Price to Income (P2I) ratio as a key indicator. “Urban cities in India now average a P2I of 11, which means you’d need 11 years of full income to afford a home. Considering that half your income goes toward living expenses, you’re looking at more than 20 years of disciplined saving,” he explains. This ratio, he adds, is comparable to New York—one of the world’s most expensive housing markets.
Why Is Indian Real Estate So Unaffordable?
Ahuja outlines three major factors:
- Outdated Building Regulations
India’s Floor Space Index (FSI) remains worryingly low. “Most metro cities operate on an FSI of 1.3 to 3.5, keeping buildings short and requiring more land to accommodate people. In contrast, the average FSI in the US is 15, and in Singapore, it’s 25,” he notes. - Artificial Scarcity Created by Developers
According to Ahuja, private developers manipulate supply by releasing only a handful of units at a time. “They’ll sell just 5 homes in a 100-unit project to inflate prices through artificial scarcity. The next set goes at a higher price, creating an illusion of high demand.” - Real Estate as a Black Money Haven
Perhaps the most alarming revelation is the control of land by a select few. “It’s said that fewer than 10 families own 20% of Mumbai’s land, while 500 families control half the city. A large chunk of India’s real estate is a parking lot for black money,” he alleges.
Rent vs Buy: What Should Home Seekers Do?
Given these realities, Ahuja offers practical advice. “Buy only when you can pay at least 50% upfront, and keep your EMIs under 35% of your monthly in-hand income. If not, rent and build income instead. Tier 2 cities might offer more value and better opportunities for ownership.”
