Why do millennial do not want to buy a “Home” or not in hurry to buy?
The buying trend is quickly shifting from ownership to access. We are fast moving towards a ‘sharing economy’.
Millennial don’t want a huge EMI burden early on in their careers. They do not want something that will take away 25-30 % of their salaries or Income. They do not want to be tied down to a mortgage, as it adds risks to their lives and their
mobility. In the ever-changing corporate landscape, millennial also don't want to be tied down to a house for the rest of their lives. They want to have the flexibility of moving jobs or countries. For older Generation, owning a home was typically seen as a status symbol, a financial security and a necessity. Not only was owning a home considered to be a major milestone in life but renting a home is considered as disparaging. On the contrary, Indian millennial do not consider buying a home as a sense of accomplishment. They would rather travel to 50 countries before they turn 30, have 3 jobs or own their busine
ss rather than buy a home. This has led to a paradigm shift in the Indian real estate industry. Millennial are content sharing their apartments with more people if it helps them save on real estate costs, or fund their next trip, next car, next outing or the next iPhone. It is important to note and understand the underlying drivers of millennial behavior and why they are no longer interested in buying real estate as compared to the previous generations.
Renting is cheaper than buying
According to research, rent payment works out to around 3% of cost of house where as EMI outgo will be much higher. Millennial are willing to ren
t a property or share their parent’s home for a longer time, and instead save for travel and leisure.
Owning a home is not only a liability that slowly turns into an asset but also a form of consumption. You have to pay property taxes, maintenance and upkeep are required. Designs can go out of style which could require renovations over time. There are also transaction costs (Steep Stamp Duty of 6-7% and Brokerage of 1-2%) involved with the purchase and sale of a home, along with the interest being paid on the loan. When you take all of the costs into consideration the investment outlook on a home may not be as great as many have led you to believe. Then there’s the fact that you can’t spend your house as it’s an illiquid asset.”
1. Buying a car is being pushed lower on the priority list of the average millennial. 25 years from now, car sharing will be the norm, and car ownership an anomaly. Car aggregators like Uber and Ola are offering almost the convenience of o
wning a car, without having to buy it.
2. Even workplaces are evolving into a shared ecosystem with co-working spaces becoming popular among youth-led startups.
3. Another ground-breaking phenomenon has been digitization. This generation has the world at its fingertips. Millennial are natives to technology and are habituated to instant gratification. Having instant access to product reviews, price comparisons and extraordinary variety shapes their buying decisions. Millennial will soon depend on mobile apps to eat, shop, book tickets and conduct banking activities.
4. A noticeable trend has been the growing conscientiousness
in two aspects, well-being and social good. As a result, millennial are becoming increasingly health-conscious and willing to pay a premium for good health. Indian millen
nial have a fitness app installed on their phones and think leading a healthy life is a priority. Majority disapprove of smoking and drinking.
5. Millennial are also more environmentally and socially aware and conscious than earlier generations.
6. Emotional well-being: Indian millennial
seem to be convinced that they will be happier than their parents as opposed to their counterparts in Europe and Japan. This is a clear indication of the general optimism about the economic scenario in India.