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Millennials’ Manual To Homebuying

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Millennials’ Manual To Homebuying
Sudhir Pai - 02 August 2019

Comprising 47 per cent of India’s working population, millennials are driving its consumption story. With high levels of disposable income, practically motivated and tech-savvy, millennials are at the forefront of India’s growth story.

Globally, India is leading in terms of millennial population and given the fact that by 2020, around 65 per cent of India’s population would be under the age of 35, demand for housing would take a centre-stage in their lives. Unlike their previous generations, millennials,  driven by a credit-led economy, want to invest in a property early in life.

Homebuying requires a bit of stretching finances but if managed smartly, can be a financially sound move. Assuming millennials are first-time homebuyers, the government has incentivised these buyers for buying affordable houses. From providing interest subsidy on housing loans to reducing the tax burden on under-construction houses—government has taken steps to make housing affordable to millennials.

However, they need to remember certain things before taking the plunge. These include:

 

Leverage Real Estate Portals: Thanks to real estate portals, transactions have become more transparent. More than 70 percent of home buyers now start their journey online and over 80 per cent of available properties are getting posted online. Home buyers now have a wide option to choose from while shortlisting a house or a project. From what to buy, where to buy and how to buy, these portals  have become a one-stop shop for smart solutions for homebuyers.

 

Identify A Budget And Stick To It:  The biggest decision one has to be take is around is finalising the budget. For most millennials, it is always advisable to draw up a hard budget and stick to it. Ask questions like - what is the maximum you can afford? What is your ideal price range? Postponing the purchase till one accumulates the necessary funds can also be a costly proposition—besides being frustrating. You can buy a small, compact home if  your income is modest.

Ready-to-move-in vs Under-construction Projects: If there is a luxury of budget then ready-to-move-in properties are the order of the day. Usually there is a 10-15 per cent cost premium for ready-to-move-in properties and millennials would be mitigating their risk by investing in such properties. Recently, there has been an increase in the inventory in the resale market, making buying a possession-ready property a more viable option now. But if the budget is tight, you may well opt for an under construction project. With RERA in place, developers are under pressure to meet deadlines for delivering projects. Reduced GST and lesser down payment make under construction projects attractive but it also comes with an added burden of EMI and rent.

 

“Affordable” Homes: Affordable housing is witnessing an uptick in demand across markets. Around 40per cent of home buyers said PMAY encouraged them to buy a new home, according to a poll conducted by Magicbricks.

 

Decide What You Value: When it comes to homebuying, millennials have different tastes. Proximity to work tops the chart. However, factors like clean environment, safe neighbourhoods and parks play an important role. It is crucial that one weighs in what are the deciding factors that they value most when it comes to buying a house.

 

Owning a dream home is on everybody’s wish-list. And the good news is that affordability of real estate has improved in the last four-five years. According to industry estimates, the average disposable income per annum for the middle-income group has grown by nine per cent across seven  major cities and during the same period, the average growth in residential property prices was less than two per cent. In most cities, you can now buy a house for 2014 or 2015  prices. Also, considering the fact that income levels have gone up for young home buyers, the price-to-income ratio  in owning a house for millennials has now become favourable more than ever.

 

The author is the Chief Executive Officer, MagicBricks.com

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