Gen Zers are buying their first homes earlier than Millennials, bank heavily on home loans

According to the Knight Frank survey, over 80% of respondents preferred owning a home with only 19% opting for renting.

Gen Z—the segment of the population 12-28 years of age—is buying their first homes at least five to six years earlier than Millennials (those falling in the 29–43 age bracket) did while relying heavily on home loans, experts say. A survey of 1,629 Indian urban homebuyers conducted by real estate consultancy Knight Frank India pointed out that more than 36 percent of Gen Zers are seeking to buy a home, the highest among all age groups.

In fact, between January and June 2024, Millennials and Gen Z purchased over 60 percent of properties listed on NoBroker's online platform in Bengaluru, according to data accessed by Moneycontrol.

The average ticket size of the properties was between Rs 70 lakh and Rs 1.1 crore. The share of transactions by Millennials and Gen Zers saw a 10 percent increase, compared to the same period in 2023.

According to the Knight Frank survey, more than 80 percent of respondents preferred to own a home, with only 19 percent opting for renting. This sentiment is consistent across generations: 79 percent of Baby Boomers (69-69 years of age), 80 percent of Gen X (44-59 years) and 82 percent of Millennials favour home ownership, while for Gen Z, interestingly, the comparable figures are 71 percent and a high 27 percent, respectively.

"We found over 80 percent of respondents aspire to own homes and a growing trend toward premium properties, particularly in urban areas. As the BFSI (banking, financial services and insurance) sector facilitates this growth—offering home loans, investment avenues and risk management tools—combined with emerging technologies and infrastructure advancements, we anticipate a resilient real estate landscape that aligns with India’s broader development goals," said Shishir Baijal, chairman and managing director, Knight Frank India.

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Strategic location priority over affordability

Knight Frank said that the location of the prospective homes stands out as a priority and is the determining factor for 50 percent of potential buyers.

However, near-equal emphasis is also on the property size and layout (45 percent), and price and affordability (45 percent), which suggests that homebuyers are equally focused on securing value for their money while looking for spaces that meet their lifestyle needs.

The builder’s reputation (35 percent) and proximity to the workplace (33 percent) play an important role, reflecting a strong demand for reliability and convenience, key factors that enhance buyer confidence in their long-term investment.

On the money aspect, 29 percent saying financing options and 22 percent pegging future resale value are key determinants highlight that affordability and long-term investment potential remain crucial factors in the decision process, particularly as more buyers gravitate towards high-end homes.

Banking on home loans

Till October 2023, Millennials and Gen Z constituted 53 percent of the total demand for home loans in India, data from Magicbricks showed. According to the property services portal, it helped to process 3–4 lakh home loan applications between October 2022 and October 2023, with a 26:74 split between women and men applicants.

“There is a discernible shift in the investment preferences of Gen Zers and Millennials towards real estate, mirroring a similar trend in the home loans category. With a stabilised repo rate, real estate remains an attractive investment asset for this demographic,” said Nimesh Bhandari, business head, home loans, at Magicbricks.

The recent Knight Frank survey found that while 83 percent of potential homebuyers earning between Rs 1 crore and Rs 5 crore prefer home loans, those with household incomes above Rs 5 crore show a higher inclination (19 percent) to utilise their personal savings or to liquidate investments for home purchases. This suggests that wealthier individuals take a more flexible, diversified approach to financing, blending traditional home loans with personal resources to secure property.