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With their refreshing cup of green tea, Preeti and Rakesh just married 6 months ago, are browsing through the websites of real estate developers and home financing institutions. They have decided that they would like to go for a property with modern amenities. They want the best deal from the realty developers as they know that this is one of the best times to sign up for their dream home considering factors like economy, lending rates, property prices etc.
Born between in the 1990s Preeti and Rakesh constitute the millennial generation which is not just increasing in size but also in its economic footprint and will be a dominant force in the real estate market in the next five years. According to a report, millennial (people born between early 80s and 2000) constitute currently close to half of the country’s population, are the predominantly salaried individuals with a professional qualification. Millennials in India currently represent around 46% of the total workforce with a spending capacity of around $3.6 billion. They are growing to play a crucial role in fuelling home demand. This is both a challenge and an exciting opportunity for the developers and home finance companies to reach out to new prospects.
Still India is a society where having a residential home is deeply ingrained sentiment not a lifestyle choice. Under the right social and economic conditions, today’s twenty and thirty-something are buying, particularly as they get married and start families. Millennials are making smart, practical moves when it comes to home buying. So what are some of the reasons which is leading to this trend?
Private cities are now expanding due to the support of private companies. As a result there is rapid urbanisation of Metro cities along with Tier 2 and Tier 3 cities. Because of this, the government in India has decided to grab the opportunity and a number of smart cities to be put up in various locations, and other initiatives. Private developers are building private housing projects that will exponentially grow in the years to come and will be the home to millennials.
Growth in disposable income:
The millennial generation due to being professionally qualified has risen relatively faster in the career ladder. At a young age, they have a larger share of disposable income than their previous generation and hence are financially stable. Being technologically savvy they want their dream homes equipped with modern facilities with the latest gadgets and technologies. They are ready to pay a premium for the premium facilities that they are looking for.
When the first home loan which Soumya and Hari had taken about 15 years back, was about to be completed, they signed up for a second property. Soumya and Hari are those millennials who realised the importance of owning a home early in their career. Within their earning lives they would be proud owners of two homes without the burden of paying rent for the major part of their lifetime and securing a retirement income for themselves from their second home.
Increased Digital Presence of Real Estate Agents:
With millennial homeowners using the Internet to research their future purchase, a strong and powerful digital marketing strategy has been adopted by several real estate developers to beat the competition. A large portion of home buyers research online and find it convenient to check and shortlist apartments virtually before physically going to see it.
India is facing a house shortage in urban areas at the moment and more housing would be required in order to meet the future demand. The ‘Housing for All’ initiative led to the expansion of India’s affordable housing segment. Generation Y is taking more interest in home ownership due to the favourable government policies on credit subsidies and support from Real Estate Regulation Act (RERA).
Impact of Covid:
The pandemic has shifted the mindset of millennial from renting to owning their own space as it brings much more security to their life.
With Work from home cultural here to stay in India, millennial wants a small house of their own which they can decorate having a small office of their own as Landlords impose strict restrictions as to what changes can be done to the house.
Millennials are not even hesitant in investing in their native place as WFH has liberated them to work from anywhere, they feel safe staying near their family in these unprecedented times.
The sudden shift of owning a home has also come from the fact that no one wants to share an apartment with others as everyone is really cautious and on top of their health.
Millennials with their demographic and economic advantage will remain an important segment with respect to real estate investments. This generation relies more on logic and real life data points than mind set and a rigid set of beliefs when it comes to making important life decisions. With all the factors favourable for homeownership, this generation is geared to make the best of this opportunity.