By Akash Pharande, Managing Director – Pharande Spaces
Millennials, usually described as those born between 1981 and 1996, have been hogging the news as the new ‘power user’ group of Indians who are buying homes. Are they really such a big deal? Let’s look at some facts to understand why millennials are such an influential homebuyer segment in India today.
The United Nations found in 2020 that India has an estimated population of about 1.38 billion, and a 2021 report by the Center for Monitoring Indian Economy (CMIE) found that the number of Indians in the age group of 20-39 years was about 470 million. In short, roughly 1/3rd of the Indian population are millennials.
A TransUnion CIBIL study found that the number of home loans taken by millennials in India increased by 96% between 2015 and 2018. And this was before COVID-19. According to a report by the real estate consulting firm ANAROCK, millennials accounted for about 42% of all homebuyers in 2020. The report also finds that the COVID-19 pandemic increased demand for homes among millennials due to their need for more space and the desire to scrap the zero-returns financial burden of rented homes.
Over the next two years, more millennials than ever before will reach the median buying age of 32. When such a vast and influential segment of residential real estate buyers starts making solid moves on the housing market, there is no way we can ignore them. More and more Indian millennials are now entering their prime buying years.
COVID-19 was undoubtedly a game changer for millennials buying homes – including in the types of homes they prefer. From 2020 onward, millennials began looking for homes with dedicated office space for remote work. Initially, the demand was in response to lockdowns and other significant changes to daily living during the pandemic. Market pundits expected that the trends of millennial homebuying and the demand for bigger homes would change after everyday life resumed.
That prediction failed to come true. Even today, with companies having opened their offices for regular work again, millennials continue to scan the Indian housing market for bigger homes in less expensive locations. Unlike their parents, they have no aspiration for the perceived prestige of inner-city living. Also, remote working has retained its spark as was previously predicted.
A 2021 survey by job portal Naukri.com found that approximately 70% of Indian millennials were working remotely, and a survey by competing job site Indeed determined that 78% of Indian millennials were determined to continue working remotely after the pandemic because of better work-life balance, lower commuting stress, and improved productivity.
A survey by HR consulting firm Mercer had similar results, finding that 58% of Indian employees – which, as we have already seen, has a substantial millennial component, intended to continue working remotely even after the pandemic. Notably, not only millennials now prefer remote work – even older employees have taken a shine to it. However, since millennials are generally more tech-savvy and open to new work arrangements, it is predominantly the millennial demographic that drives this new mindset.
The Future of the Indian Millennial Homebuying Trend
Will millennials continue to dominate the housing market? As more of them enter the housing market, there is no reason for the trend to dissipate. Many Indian companies have realized the advantages of more cost-effective, flexible work arrangements. This means the millennial aspiration to own bigger homes in cheaper suburban areas will continue.
Can rising property prices dampen the millennial homeownership zest? That is unlikely. Before the pandemic, many Indian millennials preferred to invest their spare money in the stock market and even crypto assets because of superior ROI. In the last two years, they have turned to residential property as their preferred investment asset class.
Property prices have been increasing steadily in the last year. However, the rising property prices strengthen the overall housing investment logic. The long-term benefits of owning an appreciating asset are a convincing reason for Indian millennials. This is borne out by a survey conducted by housing market aggregator portal Magicbricks, which found that 67% of Indian millennials continue to see owning residential property as a superior option to renting homes.
In short, Indian millennials will continue to see homeownership as an excellent long-term investment that will provide financial security and stability, despite short-term fluctuations in housing prices.