“Millennials, these days are not preferring buying a house.” According to various reports, people from 20-30 years of age prefer a rental home space.
It is a total contrast from our previous generation’s mindset.
The basic concept of the previous generation was to secure a government job, get settled as soon as possible, and buy a house.
As time is changing, there is a change in the ideology of today’s generation people as well. People are changing jobs frequently to gain better job opportunities, residing in one place for a very long time has become very infrequent, leading to more rental-based living.
In this article, we will look at, Why Millenials are not preferring buying a permanent house?
Flipkart’s manager Varun Bhaskar says- he has a transferrable job and changed four cities in two years in his first job. For the last year, he is in Bengaluru.
Like many other millennials, Bhaskar prefers investing in mutual funds and direct equity rather than buying a home where he can’t even live for a longer duration.
“Generation rent” is the famous phrase people use for Millenials today.
There are three major reasons for this shift.
Let’s talk about them one by one:
FLEXIBILITY FOR MILLENNIALS:
With the increase in urbanization, more and more people are seeking jobs in urban areas. Migration of people in search of a job or to serve for the job leads to renting.
Another thing is people today, prefers to get better jobs and changes job very consistently. In this case, living on rent provides an edge that you can change your house swiftly.
Data shows that 40% of migrants to urban areas live on renting, proving the high ratio of renting based living in today’s time.
INVESTMENT IN OTHER ASSET CLASSES:
Our previous generation never invested in mutual funds because they considered it to be risky. On the contrary, today’s generation is investing more in mutual funds rather than property-based equity.
Many people by 2020 have started showing interest in stock markets and have started investing in them. The people majorly ranges from 26-40 years of age!
Reasons behind rise in investing:
1-Free time and access to online learning resources:
In the pandemic period, people were having access to almost everything online!
There was also a sense of fear of economic crises in the people. These insisted people engage themselves in new forms of earning along with the contemporary forms.
2-Increase in savings:
During the pandemic, many people gathered savings because there was not much scope of using that money besides the basic commodities, leading to making new investments through online platforms (like groww and upstox).
3-Rise of easy to use investment platforms:
With the availability of smartphones and access to the internet, many people are getting aware of shares and stocks. People can handle their money in stocks through apps which make it more simple and easy to use!
It is resourceful and time-saving!
We are well aware of the gigantic traffics in urban cities. To tackle this, many people live in houses near their workplace. Properties near the workplace are too expensive, living on a renting-based system may help saving time as well as finances.
Millennials are not in pure opposition to buying houses. But due to the surging prices, it is difficult for a decent-salaried person to even buy a 2 BHK flat for his family.
An engineer working in a government job earning ₹60,000 per month says- “When they want to settle down, they have to move from there because they can’t afford a house.”
Between the years 2009 – 2020, house prices went up to 12.1% every year.
According to the report by JLL – As of March 2020, there were 4,55,000 units across India’s top seven property markets, which were unsold worth more than ₹4,00,000 crores!
It leaves no doubt about the declining preference in buying houses.
But because of the coronavirus pandemic, this picture seems to be changing. In the “work from home” environment, people want large space to live in and that too with their families, leading to an increase in investments in houses by Millenials too!