Buying a house vs Renting: CA breaks down the 'math trap' people miss and why one option is a smarter investment

The decision to buy a house or continue renting is one of the biggest financial choices most people make in their lives. With property prices rising and investment options everywhere, the debate has always been heated. While renting offers flexibility and lower upfront costs, buying a home can build long-term wealth, but only if the numbers and behaviour line up. Recently, Chartered Accountant Nitin Kaushik shared his perspective on social media platform X, breaking down what he calls the ‘math trap’ behind the rent vs buy debate.

What the ‘math trap’ actually means

In his post, Kaushik says, “The rent vs buy debate is a math trap that favors the bank more than the tenant.” He explains this using a typical example. If someone is looking at a property worth ₹2 crore with a loan interest rate of 7.5%, the numbers are not as one-sided as they look at first glance.

According to him, “If you take a ₹2 Cr property at a 7.5% interest rate, you only need 6.6% annual price appreciation for buying to outperform a renter who invests a ₹40k monthly surplus at a 10% return.”

At face value, a 10% return from investments seems clearly better than 6.6% growth in property. But that comparison, he suggests, misses how things actually play out over long periods.

Why real estate growth changes the equation

Kaushik points out that property markets in India have not been as slow as many assume. He notes, “While 10% sounds better on paper, the reality is that many Indian micro-markets have consistently cleared that 6.6% growth bar over the last decade often hitting 8% to 10% in developing hubs.”

This means that in several growing areas, real estate appreciation alone can match or even beat the expected returns from financial investments. So the gap that renters rely on may not really exist in practice.

One of the biggest factors in this debate is not just returns, but behaviour. Kaushik highlights this clearly when he says, “The math fails for most renters because they lack the absolute discipline to invest that surplus every single month for 20 years.”

The argument for renting usually assumes that the tenant will consistently invest the money they save compared to a home loan EMI. But in reality, many people don’t follow that plan strictly over long periods. Expenses change, priorities shift, and investments get skipped.

How a home loan becomes ‘forced savings’

On the other side, buying a house comes with a structure that people cannot easily avoid. Kaushik explains, “Whereas a home loan is a forced savings tool that builds equity by default.”

Every EMI paid increases ownership in the property. Over time, this creates an asset, whether or not the buyer actively thinks about saving or investing.

So, who really benefits from renting? Kaushik sums it up in a blunt way: “Renting only works if you are a machine with your investments.”

For most people, that level of consistency is difficult to maintain over decades. That is where buying starts to look more practical, even if it appears expensive in the beginning.

He adds, “For everyone else, the leverage of a mortgage creates wealth that a savings account simply cannot touch.”