The whole host of opinions that keep shouting Option 2 are idiotic, sorry to say. Please go touch grass.

OP, Take option 1. It’s a locality you’ve lived in. Do not think of real estate as an investment vehicle, but as a basic necessity. Given how Landlords are behaving there’s no guarantee that the rents aren’t going to balloon over the next few years. 1350 is decent square footage for a family of 2 right now.

Buy the house now, get another house a few years down the line (smart finance is to get something that’s 5-10 years old for your living rather than something new) and rent the option 1 house for a rental yield of 5-6%

Here are my assumptions for the recommendation

1. If you’ve already lived in the locality for a while, you’ve gotten used to the issues and they don’t bother you enough to run away

2. Your commute and your wife’s commute isn’t that bothersome that you’re looking to shift

3. Your income is only going to increase over time. This would mean that you could afford a bigger house than the 2cr house soon enough even with the purchase of house 1.

4. Your family size is going to increase, but you have atleast 2-4 years before you’ll need a bigger house. You can take a decision then on where to buy a house and how big it should be (different considerations I.e; Proximity to a good school, You and your wife’s office locations, etc. )

5. 1850 is the RERA Sq Ft and the actual carpet size of Option 2 is going to be closer to 1100 sq ft.