Property prices are on an all-time high. The prices of residential properties in Metropolitan cities are soaring. It has become almost impossible for people to afford a big and spacious home. Despite the increase, a record 82% of renters say renting is more affordable than owning, according to a new survey from Freddie Mac, up from 67% just a year ago. “Affordability remains the essential factor when it comes to determining whether to rent or purchase a home, and the cost of housing is having a significant impact on households of every age, size and location,” said David Brickman, president and CEO of Freddie Mac. “For millennials and many Gen X-ers, buying a home is no longer just a decision based on housing and housing costs – increasing pressure from student loans and the rising cost of childcare are having a significant impact.”
Millennials are not purchasing a home either because they cannot afford it or because they don’t want to. Unaffordability is an obvious reason. With the sky-high prices, instant purchase or full payment is difficult. The initial down payment itself takes up an entire decade to collect for the Gen X-ers. Due to this, one has to resort to a bank loan in order to purchase a house. However, millennials find monthly rent amounts comparatively cheaper than repaying the loan amount and interests. Bank interest rates are on a hike too, adding to the difficulty in owning a home.
The other reason why millennials are not buying a home is that they don’t want to, and unbelievable as it sounds, it is true. With ownership comes great responsibility, and this responsibility is not something the millennials want to partake. Apart from the responsibility of regular repayment of the loan, there are other reasons that holding back the millennials from buying homes. They do not want to deal with the hidden costs of homeownership. The budget anticipated to buy a new home is always bigger in order to buy new furniture, payment of taxes, maintenance and repairs, renovations, insurance and other miscellaneous expenses. Millennials also seek mobility; they prefer moving around and travelling, unlike the older generation that looked only for stability, sticking to one place.
Although the increasing trend of millennials preferring to rent properties over buying them may be causing losses to builders, it is nothing but an advantage to the already existing homeowners. People owning a second home can lease it out. The high demand for rental properties also allows them to quote their price and earn extra income. Isprava has adopted a similar business model. We not only build sophisticated and bespoke luxury holiday homes, but also rent it out for people looking to rent a villa in Goa or a private villa for rent in Coonoor. This provides our homeowners with an additional source of income and the best utilisation of their luxe property.