Do you think you made money on your property investment? Here's why a price rise isn't always a true gain

By Bricksnwall | 2025-12-07

Most buyers just think on the price of the property when they buy it and sell it, calling the difference "profit." They don't think about charges like stamp duty and home loan interest.

A house acquired years ago may now be worth crores, but most buyers don't think about how much it will cost them over the long term. They can look at stamp duty, maintenance, repairs, property tax, interest outgo, or compare it to the returns their money could have made elsewhere. A common "optical illusion" in real estate is that homebuyers just look at the sale price and the buying price and call the difference "profit." This is wrong mathematically because it doesn't take into account the cost of carrying.

In 2010, Mira Singhal, who was 35 at the time, acquired a 2BHK property in Goregaon for ₹1.15 crore. The property is now worth about 2.2 to 2.4 crore, which is a big jump but not the "doubling" that most people think it is. The numbers changed when she totaled up her real costs. She spent around ₹18 lakh on stamp duty, registration, and brokerage; about ₹42 lakh on loan interest; about ₹28 lakh on upkeep; and about ₹12 lakh on repairs and improvements. She spent more than ₹2 crore in total. The real benefit from the property was far smaller than predicted when compared to what long-term equity investing may have given.

Here's a look at the real numbers behind purchasing vs renting, and why you should plan for the long term instead of being afraid of missing out when you buy a property. This doesn't mean that owning a house doesn't make sense; it often does, but you need to be honest with yourself about it.

Why you may never be sure that your future will be better

Future appreciation is not a promise; it's a guess. Interest rates, an imbalance between supply and demand, delays in infrastructure, and changes in regulations all affect how real estate markets move in cycles.

Prices have been the same in many Indian micro-markets for 5 to 7 years, even though the economy has been doing well. "If the choice to acquire is based only on predicted capital gains, the chance of being let down is very real. Sanjay Daga, CEO and Managing Director of Anex Advisory, says, "A home should first provide personal utility—stability, lifestyle fit, and long-term use—because that's the return you can actually rely on."

If you buy in a zone of saturation, you're just putting your money away. But if you put money into a zone of transformation before the "infrastructure multiplier" kicks in, that's where wealth is made. Ritu Kant Ojha, a Dubai-based real estate strategist who works with high-net-worth individuals, says, "Investors need to stop looking for 'rising markets' and start looking for 'mispriced locations' where the gap between current value and future potential is widest."

The hidden costs that eat away at property gains

Most people who buy homes have a "optical illusion" about real estate. They say the difference between the sale price and the buying price is "profit." This is mathematically risky because it doesn't take into account the "cost of carry."

The bank is the silent partner in practically every deal. "Do the math on a regular 20-year mortgage with an 8.5% interest rate. You will have to pay back almost twice as much as the amount you borrowed. Ojha explains, "If your property goes up by 5% each year, but your debt costs you 8.5%, you are technically losing money every year in real terms."

Source: Hindustan Times