The Rule of 70: How Fast Inflation Halves Your Purchasing Power
Short answer: divide 70 by the inflation rate to see how long money takes to halve in value. At 6% inflation, purchasing power halves in under twelve years — which is why a property delivering 6% nominal appreciation has delivered nothing at all.
Halving at 6% inflation
11.7 yrs
Halving at 5% inflation
14 yrs
Nominal prime corridor CAGR
8–11%
Implied real return
3–5%
What the data says
Real return is what matters: an 9% nominal corridor at 6% inflation is delivering roughly 3% in purchasing power.
Construction-cost inflation supports replacement value, which is one reason property tends to track inflation over long periods.
Rent escalations of 5% annually roughly track inflation, preserving the income stream's real value.
Fixed-rate debt is inflation's beneficiary — the real value of the outstanding loan falls each year.
How EstateVeda executes this
Convert every projected return into a real return before comparing options.
Prefer leases with contractual escalation over flat-rent arrangements.
Weigh fixed-rate debt favourably in high-inflation environments.
Re-test long-hold assumptions against realistic inflation rather than current headline CPI.
Risks we underwrite against
Nominal appreciation that merely matches inflation is often mistaken for a successful investment.
Flat-rent leases lose real value every year of their term.
Inflation-driven construction cost increases squeeze build-out economics on plotted projects.
EstateVeda verdict
Judge every property on real return, not nominal. The Rule of 70 is the fastest way to see whether an asset is compounding wealth or merely tracking the cost of living.
Frequently asked questions
What is the Rule of 70?
Seventy divided by the inflation rate approximates the years for purchasing power to halve. At 6% inflation that is under twelve years.
Does real estate beat inflation in India?
In strong corridors, yes — 8–11% nominal against 5–6% inflation implies a positive real return. Weak corridors have merely tracked or trailed inflation.
How does inflation affect a home loan?
It erodes the real value of the outstanding principal, which benefits fixed-rate borrowers. Floating-rate loans reprice, so that benefit is partial.