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Is Buying a House Still Worth the Effort? 🏠


Investing in real estate is a tough job. As an investment one, has to go through the pain of:

  • Long transaction times

  • Paperwork and registrations

  • Low liquidity

  • Low rental yields

  • Costs around operating and maintaining the property

  • Concentration risk

  • Liabilities and debt servicing

However, despite all the trouble, real estate was an almost sure-shot way of making a fortune. Prices would increase multifold over years and one could walk away much richer than earlier, which made the effort worth taking.

Unfortunately, gone are the days when investing in real estate was a guaranteed profit-churner. The housing market has seen a significant drop in returns over the past decade, leaving many investors feeling like they've been duped by the previous generation.

Real estate price increases have gone down dramatically over the last ten years, from high-teens ten years ago, to low-single digits now.

The RBI’s House Price Index tracks home prices across 10 cities and has been indicating that real estate prices not rising nearly as much as they used to earlier.

With returns becoming less attractive, it may not be worth taking all the effort that goes into investing in real estate. But, here are some easier ways to take exposure in real estate:

  1. Realty stocks

  2. Real estate mutual funds and ETFs

  3. REITs and InVITs

Although these options take out the potential of appreciation in price that a single house in the right place, bought at the right time can offer; these do offer the benefits of low ticket size, high liquidity, easy entry and exit, diversification and low cost.

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