Saved for 20 Years, Still Can’t Afford a Home in India: What Homebuyers Can Learn from the Urban Housing Crisis
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In a powerful LinkedIn post, investment banker Sarthak Ahuja recently sparked widespread discussion around a painful reality—the urban housing crisis in India. Despite two decades of saving, many Indians still can’t afford to buy a home in metro cities. His words reflect the broader challenges of India’s housing market, where real estate prices continue to rise, incomes remain stagnant, and policies fail to evolve with growing demand.
At Diwan Housing, we believe these insights are essential for every aspiring homeowner. Whether you’re planning to buy your first home or still deciding between renting and owning, understanding the real estate landscape is critical to making the right decision.
Urban Housing Crisis Mirrors Global Metros—but Hits Harder in India
Ahuja points out that the Price-to-Income (P2I) ratio in Indian metros is now around 11. In simple terms, you’d need to save your entire salary for 11 years straight to afford a home—without spending a single rupee. But in reality, people spend at least 50% of their income on daily living expenses. That pushes the real savings timeline to over 20 years, assuming a consistent income and disciplined savings habits.
This ratio places Indian cities in the same category as global giants like New York and London when it comes to unaffordability. Yet the comparison ends there. Unlike in those cities, public infrastructure, housing finance models, and income growth in India haven’t kept pace, making the problem even more severe for the average Indian.
Why Is Indian Real Estate So Unaffordable?
According to Ahuja, three major structural problems have led to the current housing crisis. Let’s break them down further.
1. Outdated Building Regulations
A huge contributor to unaffordability is the archaic Floor Space Index (FSI) policies followed by most Indian metro cities. FSIs dictate how much you can build on a given plot of land. In Mumbai, Delhi, and other key metros, the FSI ranges from just 1.3 to 3.5. This means you can’t build tall buildings to accommodate more families, which in turn pushes up the land cost per unit.
Contrast that with global benchmarks: Singapore’s FSI stands at 25, while in major U.S. cities, it averages around 15. These higher FSIs allow developers to use land more efficiently, increasing supply and reducing the cost burden per home. Until India reforms its building codes and urban planning, the demand-supply mismatch will continue to widen.
2. Artificial Scarcity Created by Developers
Another concerning trend is the strategic release of inventory by private developers. Ahuja points out that in a 100-unit project, only a handful of homes—say five—are initially made available for sale. This limited release creates a perception of scarcity, driving up prices through controlled demand. As prices rise with each phase of sales, genuine homebuyers find themselves priced out, even before construction is complete.
This cycle not only inflates market rates but also undermines transparency. The illusion of demand keeps prices artificially high, leaving middle-income and first-time buyers at a disadvantage.
3. Real Estate as a Black Money Haven
Perhaps the most sobering observation from Ahuja’s post is the way land ownership in India is concentrated among a few powerful families. “It’s said that fewer than 10 families own 20% of Mumbai’s land,” he claims. In many cities, real estate continues to serve as a parking ground for black money and undisclosed wealth.
This hoarding of land distorts true demand and restricts the flow of affordable inventory into the market. When land remains locked up as an investment rather than being developed for housing, the shortage is not natural but manufactured.
Rent vs Buy: A Crucial Question for Modern Home Seekers
With all these challenges, what should the average home seeker do?
Ahuja suggests a cautious and pragmatic approach: “Buy only when you can pay at least 50% of the property value upfront and keep EMIs under 35% of your in-hand monthly income.” These benchmarks may seem conservative, but they’re rooted in financial stability. Stretching beyond this limit can strain your savings, limit your lifestyle, and expose you to economic shocks like job loss or rising interest rates.
If you don’t meet these benchmarks, renting might be the smarter short-term choice. It provides flexibility, allows you to invest in higher-yielding assets, and saves you from the high upfront costs associated with home buying. It also gives you time to build income and wait for more favorable buying opportunities—especially in upcoming markets.
What Diwan Housing Recommends
At Diwan Housing, we understand the frustration of aspiring homeowners who’ve done everything “right” and still find homeownership out of reach. That’s why our focus is not just on selling homes, but on educating buyers and offering properties that actually make sense for long-term value and affordability.
We help clients look beyond metro cities where the market is saturated and overpriced. Emerging Tier-2 cities and suburban areas near Pune, for example, offer a better price-to-income ratio, stronger future appreciation, and better quality of life. These are the places where your money works harder, and your dream of owning a home becomes realistic again.
Diwan Housing also emphasizes legal transparency, easy financing options, and complete buyer education. We help you evaluate not just the property, but your readiness—financially and mentally—to commit to ownership.
Conclusion: Shift Your Strategy, Not Your Dream
The Indian real estate market may feel intimidating, but that doesn’t mean homeownership is impossible. It simply requires a smarter strategy, deeper awareness, and the right partners. If saving for 20 years isn’t enough to buy a home in a big city, perhaps it’s time to rethink where and how you’re investing—not just your money, but your expectations.
Sarthak Ahuja’s insights serve as a wake-up call, but also as guidance. Real estate doesn’t have to be a burden or a gamble. With the right approach, it can still be your greatest asset.
At Diwan Housing, we’re committed to helping you navigate this journey with clarity and confidence. Whether you choose to rent, invest in a plot, or buy a home, we’re here to make the process transparent, affordable, and tailored to your needs.
Let your dream home be more than a dream—with the right plan, it can be your reality.
