Breaking Down the 109-Year Myth: Mumbai Real Estate and the Savings Dilemma
Bertie, a seasoned fund manager, delves into the sensational claim that it takes 109 years of savings for top-income families in Mumbai to afford an average-sized dwelling. Discover the real story behind the numbers.
Mumbai Real EstateSavingsProperty PricesIncome LevelsEconomic DataReal Estate MumbaiJun 30, 2025
Three people from this cohort sent the same news piece to Bertie last week. It was about how it would take 109 years of savings for even the top 5% income-earning families in Maharashtra to afford an average-sized dwelling in Mumbai. Over time, Bertie has developed some standard responses to these Instagram forwards like “It’s Trump, man!” (with hands thrown up in the air emoji) or “Stay invested for the long-term” (with a human in meditation pose emoji) or the most-used “This sounds like a scam” (with a red cross emoji) but this 109 years of savings, Bertie thought, would deserve a deeper response.
Now Bertie loves to rant about Mumbai real estate as much as the next guy in the local train; not just about prices but the soul-sapping experience of buying a house in the city. But Bertie also takes pride in the fact that he rants with data. So, over the weekend, Bertie went through the math behind the sensational ‘109 years of savings’ news item. To estimate the savings potential of a household, the data used consumption expenditure as a proxy and multiplied it by the national savings rate of 30%. Now Bertie knows enough economics to know that the savings rate is to be applied to the overall per capita GDP number and not the consumption expenditure.
The other issue, thought Bertie, was using the Maharashtra income levels to compare with real estate prices in Mumbai. Of all the states in the country, Maharashtra probably has the starkest difference between the per capita income of its capital city and the rest of the state. Various studies estimate that Mumbai’s per capita GDP would be 3-4x that of Maharashtra.
The thing that made Bertie go wide-eyed, though, was the estimate for the cost of an average dwelling unit in Mumbai. It was assumed to be ₹3.5 crore: a 1,184-square-foot house costing almost ₹30,000 per square feet. Even a permanently outraged news anchor would think twice before basing his outrage on this estimate. Bertie looked up recent Government data that showed that the average value of property transactions in Mumbai in recent months was just over ₹1.5 crore, and that too after the recent surge in the luxury end of the market.
To be sure, not for a minute is Bertie arguing that Mumbai real estate is affordable, but 109 years is taking it a bit too far. Bertie is thinking whether he should send a long voice note to his friends explaining all this, or should he resort to his time-tested strategy of a one-liner. After some deliberation, Bertie did the predictable. He typed: “It’s the builder-neta nexus, man” (with the usual hands thrown up in the air emoji).
Frequently Asked Questions
What is the main issue with the 109-year savings claim for buying a home in Mumbai?
The main issue is the incorrect use of consumption expenditure as a proxy for savings and the application of the national savings rate to this figure. Additionally, the real estate prices used in the estimate are significantly higher than the actual average transaction values in Mumbai.
How does the per capita income of Mumbai compare to that of Maharashtra?
Mumbai’s per capita GDP is estimated to be 3-4 times higher than that of Maharashtra, highlighting the stark difference between the capital city and the rest of the state.
What is the estimated cost of an average dwelling unit in Mumbai according to the sensational news item?
The sensational news item estimates the cost of an average dwelling unit in Mumbai to be ₹3.5 crore, which is significantly higher than the actual average transaction value of around ₹1.5 crore.
Why does Bertie think the 109-year savings claim is exaggerated?
Bertie believes the claim is exaggerated due to the incorrect application of economic data and the overestimation of real estate prices. He points out that while Mumbai real estate is not affordable, the 109-year figure is unrealistic.
What is Bertie's typical response to sensational financial news shared by his friends?
Bertie often responds with one-liners like 'It’s Trump, man!' or 'Stay invested for the long-term,' but in this case, he decided to send a more detailed explanation to his friends.
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