If you went back in time, most ‘middle class’ people were spending a big fortune of their income on ‘essentials’. Imagine in the 1980s – a person earning Rs. 5000pm (almost a HUGE salary!) – could have been spending Rs. 2000 a month on household expenses. This was about 40% of the take home salary.

Cut to today. Monthly take home is say Rs. 200,000 – the household expenses are say Rs. 40,000 p.a. This is just 20% of the take home pay.

Clearly NON-DISCRETIONARY  SPENDING has gone down…which puts more much more money into your own hands for deciding what to do. So you end up spending on a house, a car and of course lifestyle.

How much should a person spend on housing should be seen as a question which is considered ALONG with the total amount of money spent on a) office commute, b) school commute and c) social commute if you socialise a lot.

For example a person staying in Prabhadevi, kids studying in a school in Dadar and both husband and wife working in Parel / Worli area may find it justified to pay Rs. 2 lakhs PER MONTH as rent in that area.

However for a person whose wife is full time at home and kids study in a school in Nerul it may seem better to pay Rs. 60,000 rent for a similar house and take the trouble of travelling from Nerul to Parel for his work (he may end up paying Rs. 20k extra on travel), but the saving in rent is just too high to be ignored.

What percentage one spends is obviously a function of the location of the house, the amenities, age of the house, etc. – but one does hear of Rs. 70,00,000 ANNUAL RENT in South Mumbai. This compares UNFAVORABLY WITH housing with far superior facilities in Singapore and Dubai 🙂

Wah wah Mumbai….

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  1. Hi Subra,

    I find the Rents mentioned in the Article seems to be Very High.

    It is really difficult to digest such High Rent amounts
    Rs.2 lakhs per Month and Rs 60000 per Month

    In Chennai -we get decent houses for 12K per month and Excellant houses at 20 to 30K per month.

  2. Rents are normally about 3-4% of the price of the house. A house in Central Mumbai (3 BHK) costs about Rs. 15 crores. Recently a house in Cuffe parade was sold for Rs. 28 crores.

    Please apply the formula and arrive at the rates..

  3. Honestly only yesterday thought that its quite some time ,regular readers have not got any enlightment on Housing from Subra and Bang here it is .Your articles on real estate helped many of our readers to take a right decision .many thx

  4. SoBo equiv in Sing would cost approx INR 45-50 lac per annum. Central Mumbai / Prabhadevi or slightly better would cost approx INR 15 lac per annum in Dubai. Quality of infrastructure, quality of building, time taken to work (less than 20 min either place), every which way both cities offer better value for money.
    Both would be good places to spend the latter part of career as stress levels drop down significantly – any one who has managed a crazy commute in Mumbai, AND managed deadlines would probably find ME a breeze!

  5. if you are able to afford to spend 2 lakhs per month on rent,you should be able to have a work-from-anywhere set up. i’d expect a highly paid professional to atleast have WFH facilities.

  6. “A house in Central Mumbai (3 BHK) costs about Rs. 15 crores.” If I had that kind of money, I could have purchased the entire apartment complex with ~60 flats where I paid 25Lac for 1 house in a decent town!!!
    I’m glad I decided to stay out of metros & never looked back 🙂

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