The people born between the 1950s and 1980s valued being a homeowner as a social accomplishment and a form of financial security. The arrival of the younger millennials, however, changed the trend. This younger generation in India not only bought homes at a later age but also preferred rented accommodation vis-a-vis ownership of a house.
This can be seen in the percentage decrease in younger people purchasing homes. According to the ANAROCK Survey of 2019, 36% of the property seekers were in the age bracket of 35-45 years, followed by 25% in the 45-55 years age bracket. As per the survey, 20% of the people were in the age group of 25-35 years. Thus even as older millennials comprise the largest buyers, the younger millennials are keeping away from purchasing a home due to a wide array of reasons. Here’s a look at how and why:
The disparity between EMI and rent payments
To put it simply, renting is cheaper than buying a house. According to a recent research report, the cost of buying a 2 BHK apartment in the prime locality of Mumbai can be around Rs. 1.9 Crores, while those in similar localities of Pune and Hyderabad would be around Rs. 75 Lakhs and Rs. 80 Lakhs respectively. This would roughly mean EMI payments of around Rs. 1.3 Lakhs for Mumbai along with Rs 50,000 and Rs 56,000 for Pune and Hyderabad respectively. In contrast, getting a 2 BHK apartment for rent in Mumbai would cost around Rs. 40,000, while those for Pune and Hyderabad would range between Rs. 20,000 to Rs. 30,000. Thus, with the high EMI payments, which can account for up to 30% of the salary amount, younger millennials are finding it tough to buy a house. Instead, they are choosing a rented accommodation, which is a cheaper alternative to owning a house. Also, the rented accommodation provides the younger generation with flexibility in changing cities and jobs.
However, even younger millennials should well remember that a home is a form of financial security and rented accommodations can’t be a viable alternative for purchasing a home. If you are worried about EMI payments and home loan interest rates, then you can get competitive rates by choosing a trusted financial institution. The Bajaj Finance home loan interest rate on Finserv MARKETS can start from 7.50% per annum onwards. What’s more, documents required for home loans are minimal.
Later age of marriage
Purchasing a home becomes a priority after marriage, especially when you start a family. However, with the younger millennials marrying at a later age purchasing a home has been on the lower rungs of the priority list. For example, while the average age for marriage in 1960 was 15.7 years, in 2016 it climbed to 22.2 years for both rural and urban India. The average marriage age for urban India stood at 23.1 years. With comparatively later marriages, the probability of purchasing a house at an earlier age becomes less.
Cumbersome procedure of availing home loans
When it comes to traditional home loans being provided by banks and other financial institutions, the cumbersome offline process involved is a big deterrent for the younger generation. The convention home loan products are often opaque and lack technology-driven measures.
As an alternative to traditional home loans, you can choose online home loans from a trusted financial partner. For instance, you can select the Bajaj Finance Home Loan, available on Finserv MARKETS. Here, documents required for home loans are simple and can be easily submitted online. What’s more, the Bajaj Finance home loan interest rate is affordable.
How did the pandemic affect the perception of the younger generation?
With multiple negative repercussions, the outbreak of the pandemic made all categories of people, including younger millennials, realise the stability and security that comes with owning a house. With repeated cuts in the Repo rates, the home loan interest rate has seen a historic decrease, making such loans more affordable. As per recent reports, the demand for buying homes among the younger millennials has increased, as compared to the pre-pandemic levels. As the work-from-home culture becomes the norm, the younger generation is increasingly making its shift towards owning a physical asset in the form of a house.
Thus, the disparity between home rent and EMI payments for home loans is one of the major reasons why the younger generation finds it tough to purchase homes. The outbreak of the pandemic, however, reinforced the importance of asset creation.
If you are also a young millennial, looking for a viable home loan, then you can zero in on the best home loans on Finserv MARKETS. The documents required for home loans are minimal, requiring basic eligibility. The present Bajaj Finance home loan interest rate ranges between 7.5% and 10%, thus allowing you both affordability and financial convenience. You can also avail of multiple exclusive benefits, like flexible repayment, balance transfer and top-up options