12 Apr 2018
Studies have shown that millennials are expected to have an enormous impact on the housing market. Associate Dean and Director of the School of Real Estate, RICS School of Built Environment, Sunil Agarwal FRICS explains why it is critical for us to understand the way they think to ensure we don't alienate future home buyers.
What are millennials' housing preferences? Do they like living with their parents or do like living independently?
We are seeing both these trends play out. The greater trend, however, is young adults living with their parents, unless they move to a different city to pursue career opportunities. Moving out of a parents’ home costs money and time. There is also a cultural and social taboo attached to living away from parents.
What kind of social taboo are you talking about?
In India, for instance, we have very close-knit families; young adults are not encouraged to be independent. Moving out of a parents’ home when you are living in the same city as them could imply that you have a family feud going on or that you don’t care for your parents.
It is not very common for millennials to rent a home away from their parents if they live in the same city. Having said this, millennials tend to move around quite a bit for their career, so they do live independently when they move to a different city.
Is it true that millennials prefer to rent homes rather than buy?
Renting a house is more convenient than buying because it is cheaper and it offers flexibility and freedom. Buying a home requires a commitment to stay in a location for a long period of time. Millennials like the freedom to change job or location that comes with renting a home. Also, millennials can only afford a home in a trendy location if they rent; affordable homes are often in far-away locations with little or no infrastructure, which does not appeal to them.
Does this mean that the real estate market is missing out on a large chunk of home buyers?
No, this is not true. Buying a house requires long-term financial commitment towards mortgage payment and maintenance of property, which does not appeal to millennials. This does not mean that millennials do not buy property. They do invest, but they are entering the housing market much later than previous generations did.
Would you say that millennials spend money differently than the previous generation?
I would. Millennials tend to spend more on experiences. They don’t think twice before buying the latest gadget or a designer label. Clearly, millennials have a different set of priorities than their parents. Convenience is very important to them.
If we talk about their home choices, millennials are happy to invest in serviced apartments, which are very convenient for career professionals. There is a strong demand for such homes. If developers build the right kind of apartments with amenities that millennials are looking for, they can easily tap into the latent demand for homes. Developers in cities are doing this by building serviced apartments, which have every convenience that one can think of.
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