What property actually returns, once you count everything
A flat bought at ₹50 lakh and sold at ₹85 lakh looks like a 70% gain. After transaction costs, holding costs and time, the annual return is often modest.
Property returns are usually quoted as the difference between purchase and sale price. That figure omits most of the transaction, and the omissions are large.
The full calculation
A flat bought at ₹50 lakh, sold ten years later at ₹85 lakh.
Costs at purchase:
| Item | Amount |
|---|---|
| Stamp duty and registration | ₹3,50,000 |
| Brokerage | ₹50,000 |
| Interiors and fit-out | ₹4,00,000 |
| Effective cost | ₹58,00,000 |
Costs while holding, ten years:
| Item | Amount |
|---|---|
| Property tax | ₹2,50,000 |
| Maintenance and society dues | ₹9,00,000 |
| Repairs and repainting | ₹3,00,000 |
| Total | ₹14,50,000 |
Costs at sale: brokerage of about ₹1,70,000, plus capital gains tax on the gain.
Sale proceeds of ₹85 lakh, less ₹1.7 lakh brokerage, against ₹58 lakh in and ₹14.5 lakh of holding costs. The net gain is roughly ₹10.8 lakh on ₹58 lakh committed for ten years — a CAGR of about 1.8%, before tax.
The headline said 70%.
Where property genuinely performs
Leverage. A 20% down payment gives exposure to the full asset. If the property appreciates 6% a year, the return on your equity is far higher — though the loan interest has to be subtracted, and leverage magnifies losses identically.
Rental yield plus appreciation together. Neither alone is usually compelling; combined, they are competitive.
Location changes. The genuinely large property gains come from areas that transformed — new infrastructure, employment centres, connectivity. That is a specific bet on a specific place, not a general property return.
The costs nobody models
Vacancy. Two months empty a year cuts a 3% yield to 2.5%.
Illiquidity. Selling takes three to nine months, and a fast sale means a discount. You cannot sell a third of a flat to fund an emergency.
Concentration. One property is often 60 to 80% of a household's net worth, in one asset, in one city, frequently in the same city as their job — so a local downturn hits the asset and the income together.
Model the return
The honest summary
Property can be a good investment. It is rarely the effortless one it is described as, and the difference between the perceived and actual return is almost entirely made up of costs that are real, documented, and left out of the story.
Run the numbers with every line included before, not after.
Open the real estate calculator
Published by FinClamp. This guide is information, not financial advice — see the disclaimer.