The Nifty50 Total Index Return (ie NIFTY50 with dividends reinvested aka growth MF) gave 15x returns over 21 years (https://in.investing.com/indices/nifty-total-returns). So ~13.8% CAGR, which means about 5-6% real return (return over inflation). The rolling average returns of NIFTY50 is much higher and that would in fact be more representative of a retail investor's return (rather than a date to date return - that's actually a poor representation of the return profile of an index). This investment in NIFTY50 would have been entirely passive (ie without requiring any effort on your part), with very low transaction costs (stamp duty + capital gain, etc.), and completely liquid and without counterparty risk. It would of course be subject to volatility and that seems to make most people react emotionally to the stock market but always remember: volatility isn't the same as risk. On top of this, the only wager you would have had to take to make this investment in NIFTY50 would have been that the Indian markets will get more efficient and the top 50 Indian companies (by market capitalisation) would make money.
Real estate is an extremely local and cyclical market, the last cycle ended around 2013 or so. Very rarely do most investors have an accurate understanding of the local market or any cogent reasons for making investment in a property in a specific area. The rent yields for non-commercial properties are very low in India (1.5 - 2.5%) and even this low yield is tax inefficient (if you're in the 30% bracket, your effective tax rate for renting out a property will be ~20%). So, effective post tax rent yield is about 1.2 - 2%. The capital appreciation for non-commercial properties isn't (on an average) all that great, IIRC (and I could be wrong I read this a while back) around 2% real return. To take your example, 6x return over 15 years is 12.7% CAGR and over 20 years is 9.8% CAGR. If you think 12.7% and 13.8% CAGR will give you close-ish returns: then realise the difference over 30 years between 12.7% and 13.8% CAGR is about 36% difference (calculated from the lower amount) - that's an absolutely massive crazy number. 1/3 more money at the end of 30 years with a 1% compounded return difference.
Money is always about opportunity cost and relative risk to return reward.
In-house lawyer here. I own 3 houses. 2 of them are loan-free, and I will soon finish the loan on my current house. I benefited from starting early and then getting some unexpected RSUs that helped me close loans within a few years. Sharing some things that I've learnt during this journey, with the caveat that these tips are only for those who are end users and actually plan to stay in the houses (I have never bought houses as investments).
Never buy the cheapest house that you can find. There's a world of difference between a 1 crore and a 1.2 crore house in the same complex, and you will find yourself wishing you had spent more on the more premium house. In the long run, it is easier to sell or rent the 1.2 crore house, as it has more premium features, and many buyers and potential tenants are willing to pay extra for it.
Take the biggest loan you can get. If you can afford to pay 1 lakh a month, you can take a loan of 1.25 crores for 20 years. But if it is a 10 year loan, you can only take an 85 lakh loan. This means that you can buy a 1.5 crore house on a 20 year loan, but a 1.1 crore house on a 10 year loan. After a few months, you will wish you had bought the bigger and fancier house, instead of "settling" for the cheaper house. A more premium house makes a huge difference to your quality of life.
A 20-year loan is not actually a 20-year loan. Everyone I knew managed to close their 20-year loans in 10-12 years, because of rising incomes and regular prepayments. I even know people who have closed it in 6-7 years.
Moving on to whether to own or rent a house , this is ultimately a personal call that depends on many factors. IMO, if you have certainty about staying in one place for at least 5-6 years, go ahead and buy. If you are unsure, then rent.
If you are looking at a house as an investment, stop right now. Put the money in an index fund instead. The hassles of being an investor-owner are many, and there is a glut of apartments right now.
Home ownership is not a financial investment. It is an investment in your own quality of life. Once you realize this, it will change your entire perspective.
Absolutely buy a house on EMIs. Assuming that you will take 7-8 years to clear your loan/ build up enough to buy, that is 7-8 years of renting and not owning your home. That's an emotional decision, not a financial one.
Even worse, when you finally want to buy, the bar would have moved. That 2 crore house you want to save for? By the time you'd have saved 2 crores, that house would be worth 3.5, you'd have spent 12 years on rent, and worse, you'd have outgrown the 2 crore house and now want a 5 crore house.
Don't put off consumption. Home loan EMIs are one of the best things since sliced bread, provided you keep them under control, and have reasonable confidence in your repayment capacity.
The Nifty50 Total Index Return (ie NIFTY50 with dividends reinvested aka growth MF) gave 15x returns over 21 years (https://in.investing.com/indices/nifty-total-returns). So ~13.8% CAGR, which means about 5-6% real return (return over inflation). The rolling average returns of NIFTY50 is much higher and that would in fact be more representative of a retail investor's return (rather than a date to date return - that's actually a poor representation of the return profile of an index). This investment in NIFTY50 would have been entirely passive (ie without requiring any effort on your part), with very low transaction costs (stamp duty + capital gain, etc.), and completely liquid and without counterparty risk. It would of course be subject to volatility and that seems to make most people react emotionally to the stock market but always remember: volatility isn't the same as risk. On top of this, the only wager you would have had to take to make this investment in NIFTY50 would have been that the Indian markets will get more efficient and the top 50 Indian companies (by market capitalisation) would make money.
Real estate is an extremely local and cyclical market, the last cycle ended around 2013 or so. Very rarely do most investors have an accurate understanding of the local market or any cogent reasons for making investment in a property in a specific area. The rent yields for non-commercial properties are very low in India (1.5 - 2.5%) and even this low yield is tax inefficient (if you're in the 30% bracket, your effective tax rate for renting out a property will be ~20%). So, effective post tax rent yield is about 1.2 - 2%. The capital appreciation for non-commercial properties isn't (on an average) all that great, IIRC (and I could be wrong I read this a while back) around 2% real return. To take your example, 6x return over 15 years is 12.7% CAGR and over 20 years is 9.8% CAGR. If you think 12.7% and 13.8% CAGR will give you close-ish returns: then realise the difference over 30 years between 12.7% and 13.8% CAGR is about 36% difference (calculated from the lower amount) - that's an absolutely massive crazy number. 1/3 more money at the end of 30 years with a 1% compounded return difference.
Money is always about opportunity cost and relative risk to return reward.
Never buy the cheapest house that you can find. There's a world of difference between a 1 crore and a 1.2 crore house in the same complex, and you will find yourself wishing you had spent more on the more premium house. In the long run, it is easier to sell or rent the 1.2 crore house, as it has more premium features, and many buyers and potential tenants are willing to pay extra for it.
Take the biggest loan you can get. If you can afford to pay 1 lakh a month, you can take a loan of 1.25 crores for 20 years. But if it is a 10 year loan, you can only take an 85 lakh loan. This means that you can buy a 1.5 crore house on a 20 year loan, but a 1.1 crore house on a 10 year loan. After a few months, you will wish you had bought the bigger and fancier house, instead of "settling" for the cheaper house. A more premium house makes a huge difference to your quality of life.
A 20-year loan is not actually a 20-year loan. Everyone I knew managed to close their 20-year loans in 10-12 years, because of rising incomes and regular prepayments. I even know people who have closed it in 6-7 years.
Moving on to whether to own or rent a house , this is ultimately a personal call that depends on many factors. IMO, if you have certainty about staying in one place for at least 5-6 years, go ahead and buy. If you are unsure, then rent.
If you are looking at a house as an investment, stop right now. Put the money in an index fund instead. The hassles of being an investor-owner are many, and there is a glut of apartments right now.
Home ownership is not a financial investment. It is an investment in your own quality of life. Once you realize this, it will change your entire perspective.
Even worse, when you finally want to buy, the bar would have moved. That 2 crore house you want to save for? By the time you'd have saved 2 crores, that house would be worth 3.5, you'd have spent 12 years on rent, and worse, you'd have outgrown the 2 crore house and now want a 5 crore house.
Don't put off consumption. Home loan EMIs are one of the best things since sliced bread, provided you keep them under control, and have reasonable confidence in your repayment capacity.