Manoj Kumar, 35, an IT professional in Bengaluru, is planning to buy a 2BHK or 3BHK preferably close to the IT corridor. “I have saved about a crore since the pandemic, and if I have my own house I no longer need to pay rent,” he said.
Kumar said the major driving force behind the decision is soaring rentals in the city.
Like Kumar, Akshay Chowdhury (30) also an IT professional, who has also saved money for the last four years, plans to buy a property in Bengaluru without opting for bank loans. “I do not want further hassles in paying another EMI and also the bank loan interests are rising today,” Chowdhury said.
People in their 20s and early 30s whose incomes were hit during the pandemic are not driving home demand in the IT capital of India anymore, replaced by those in the higher age cohort.
Despite the economic slowdown and soaring home loan rates, property investments by ‘late millennials’ (35-42 years of age group) have risen compared to the early millennials, data from BankBazaar shows.
Experts say in IT capitals like Bengaluru, the global headwinds have made little impact on the younger crowd's decision to invest in a property.
While Gen Z is defined as the age group between 11 and 26 years, millennials belong to the 27-42 years group. Baby boomers, or people born during the mid-20th century baby boom, belong to ages above 58 years.
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Millennials investing more, late millennials investing most
Adhil Shetty, CEO of BankBazaar said, “The idea of owning your own home has always been a priority for Indians. We have seen this time and again in the BankBazaar Aspiration Index. Even during the pandemic, this was one goal that remained important to people and one they were working towards.”
According to the BankBazaar index, savings for people aged between 28 and 34 years have increased by 17 percent, the highest in all age groups.
Ashwin Parikh, a bank analyst said the Covid pandemic has been the driving force that got millennials investing in real estate, especially when the need for their own house was more robust.
According to data by realty consultant Anarock, real estate continued to be the best asset class for investment for over 57 percent of respondents in the survey, a whopping 48 percent of these were in the age bracket of 25-35 years. Previously, in the 2019 survey, this percentage was lower at just 20 percent.
However, BankBazaar data shows the number of home loans taken in 2022 has increased by 11 percent compared to pre-Covid levels. For early millennials, the percentage has fallen by about 18 percent.
Santhosh Kumar, Vice Chairman of Anarock Group, said the current buyers are working couples with children, most currently pursuing work-from-home and e-learning options – suggesting that late millennials have started mobilising their decisions to buy a house more.
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A median shift in age
Shetty added the age range of homebuyers interested to buy a property has risen by at least 4-5 years.
“The median age of home buyers at the beginning of the century hovered around 35-45 years, falling sharply from 45-55 years of the 80s and 90s. The age of home buyers fell has been falling even further before the pandemic hit, bringing the median age to the late 20s and early 30s,” he added.
However, the pandemic saw people increasingly deferring their home purchases. Those in the early stages of employment were hit the hardest in terms of loss of income and savings during the pandemic. This has led to an upward shift in the median ages of homebuyers.
Sunil Singh, a realtor at Realty Corp said most investments in Bengaluru are being done by millennials already in the job for at least 4-5 years. “For someone who is a project leader or holds a managerial position, the investments are often ranged in Rs 1-1.5 crore bracket. Additionally, most of the investments are happening in the eastern and northern parts of Bengaluru,” he said.
The eastern parts include Marathahalli, Bellandur, Old Airport road and Haralur – places that are currently seeing growing suburban real estate pockets in the city. Places like Dollars Colony, Dasarahalli, and HBR Layout fall in the northern part.
Santhosh Kumar said the mid and premium segment properties priced between Rs 40 lakh and Rs 1.5 crore are preferred by the majority of these buyers. There is also an increasing demand for luxury properties priced Rs 1.5 crore to Rs 2.5 crore, he said.
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The slowdown
Experts, however, point out that though the global headwinds have not dented the millennials' dream of owning a house, a slowdown can already be seen in markets like Bengaluru.
“Compared to before January, there is a 20 percent drop in new queries from millennials in the city. Though we see more layoffs happening in the future, re-hiring can be seen by Indian startups and non-US market-based companies in the city,” Singh said.
According to him, it will take another year for millennial investments to return to last year's levels.
Umakant Y, Director, Advisory Services, Colliers India added that every micro city has its own environment or parameters to understand the market projections. “Bengaluru will see marginally more slowdown in millennial investments compared to other cities like Mumbai or Delhi. However, the new housing inventories being added periodically here will keep sentiments high,” he added.
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