Price-to-rent ratio in India: what it tells you about buying vs renting
By Sri Naga Vinay Mutyala · Updated November 2026
The price-to-rent ratio is the home’s price divided by a year’s rent. It tells you how many years of rent the home costs, and so how much the rent you save pays you back. In our data on 79 localities it ranges from 22 (Hinjewadi, Pune) to 33 (Prahlad Nagar, Ahmedabad).
How to work it out
Gross rental yield = 1 ÷ ratio = (Monthly rent × 12) ÷ Home price
Example: a ₹1 crore flat renting for ₹30,000 a month. ₹1,00,00,000 ÷ ₹3,60,000 = 27.8, a gross yield of 3.6%.
Why it matters
When you buy, you stop paying rent. That saved rent is your return on the home, on top of any price rise. At a ratio of 28, the saved rent is 3.6% of the price a year, while a home loan costs around 8.5%. The gap has to be made up by price growth. The higher the ratio, the more growth you need.
What our data shows
| Price-to-rent ratio | Localities | Buying wins at the 10-yr trend | Median growth buying needs |
|---|---|---|---|
| Below 23.5 | 29 | 7 of 29 | 8.3% |
| 23.5 to 26 | 21 | 4 of 21 | 8.6% |
| 26 to 29 | 23 | 6 of 23 | 9.3% |
| 29 and above | 6 | 0 of 6 | 9.8% |
Lower ratios need less price growth for buying to win. But the ratio is not the whole story: whether a locality actually delivers that growth decides the verdict.
By city
| City | Median ratio | Range |
|---|---|---|
| Hyderabad | 28 | 23 to 29 |
| Bangalore | 23 | 22 to 31 |
| Pune | 25 | 22 to 27 |
| Mumbai | 25 | 22 to 31 |
| Delhi NCR | 24 | 22 to 31 |
| Chennai | 23 | 22 to 29 |
| Kolkata | 23 | 22 to 31 |
| Ahmedabad | 27 | 22 to 33 |
Rules of thumb (and their limits)
- Below about 20: buying looks good on the numbers almost anywhere. Rare in Indian metros today.
- 20 to 30: depends on price growth. This is most of urban India.
- Above 30: renting and investing usually wins unless prices rise fast.
These ignore your loan rate, tenure, and how much the price will actually grow. For a proper answer, put your numbers into the buy vs rent calculator or look up your locality in the Rent or Buy Index.
Questions people ask
What is the price-to-rent ratio?
The price of a home divided by one year’s rent for it. A ₹1 crore flat renting for ₹30,000 a month (₹3.6 lakh a year) has a ratio of about 28: it costs 28 years of rent.
What is a good price-to-rent ratio for buying?
Lower is better for buyers. In our data, localities below about 23.5 need noticeably less price growth for buying to win than those above 29. But no ratio alone settles it: price growth and your loan rate matter just as much.
What is the rental yield?
Rental yield is the flip side: one year’s rent divided by the price. A ratio of 28 is a yield of about 3.6%. Indian city homes typically yield 3–4.5% gross, well below home-loan rates.
More guides
- Buy a house or rent and invest in a SIP? A worked example
- Prepay your home loan or invest the money? Worked example
- Home loan for 20 or 30 years? What the longer tenure really costs
- ₹50 lakh home loan: EMI, total interest and what you really pay
- Home loan EMI calculator
- Rent or Buy Index: verdicts by locality