This festival season millennials, the 'renting generation', will scramble to be homeowners

An artist adorns the idol of Goddess Durga before selling it to a customer (Image: Reuters)

The festival season becoming the annual high point for housing sales has its origin in tradition. It is considered an auspicious time to invest in wealth-creating assets. While the sentiment is obviously still involved, it has ceased to be the most important driving force behind buying a house.

Sales in this period are now primarily driven by the fact that developers and lending banks roll out the most attractive offers of the year during the festival season.

That said, the 2021 season, which started on October 7 with Navratri, is unique in many ways. There is also a lot of demand for homes— both old (pent up from before the Covid-19 outbreak) and new demand, coming from people who were content with renting homes.

One of the defining features of today’s demand is that even the millennials are now in the market for homeownership.

This was predominantly the “renting generation”, which preferred to use its money for other investments and purposes, not for buying homes. There are reasons for this change.

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Reviewing a nightmare

Above everything else, the pandemic intimidated people, institutions and markets, inducing a feeling of having no control over what was happening.

Everything depended on what the virus did next and how people reacted to it. Life became impossible to predict, as news and images of death, devastation and danger dominated daily lives.

Jobs were lost, at worst, or uncertain, at best, salaries and markets nosedived and investments lost value.

In this environment, people tend to long for a sense of stability, control and predictability. In the backdrop of constant warnings to stay at home and with offices and schools closing indefinitely, our homes became our first line of control and defence. Within our four walls, we were in control of our lives and could safeguard our families.

While the job markets remained weak, people began leaving their rented homes in the cities to return to native towns or cities to their family homes.

Signs of revival

The trend of owning a house gaining sudden popularity during the pandemic was first seen in the UK, the United States and Middle Eastern markets like Dubai.

While housing demand spontaneously grew in these countries, India was still reeling from the first wave of Covid-19. However, as soon as site visits became possible again and the job market stabilised, Indians began to scout for ownership homes in 2020.

Aware of the increasing interest in buying homes and the need to revive consumption and lending, the central and state governments began rolling out incentives last year. Maharashtra announced a well-timed stamp duty cut which made a huge difference in cities such as Mumbai and Pune.

However, with the coronavirus still dictating life and restrictions on movement, the 2020 festival season was anything but festive.

A time for change transformation

The festive season 2021 comes at a time when most restrictions within the country have been lifted. While business from NRIs remains tepid because of the international travel ban, the domestic housing market was booming even before the onset of the festival season.

Indians are now moving freely, restarting their businesses and attending office, socialising and going on-site visits. Even the malls have opened, as cases have fallen drastically in most states.

This year, the season is extremely significant for the housing market. Even from a traditional point of view because there is a real sense of good having triumphed over evil.

A large number of Indians will book their dream homes in the next two months—in celebration of overcoming the worst nightmare of the century, as a safeguard against any such disruption in the future and to benefit from deals that may not last much longer.

Property prices have already risen by between 3 and 4 percent in many cities and the Reserve Bank of India (RBI) will keep the repo rates reined in only as long as the economic situation remains sensitive.

ANAROCK Research indicates that we may see at least 10-15 percent growth in housing demand in the ongoing festive period (October-December across the top 7 cities against the preceding quarter.

In Q3 2021, the top 7 cities saw total housing sales of approximately 62,800 units – already the best quarterly sales since the outbreak of the coronavirus.

If our predictions hold, the festival quarter will see at least a 35-40 percent yearly rise in overall housing sales across the top 7 cities compared to the same period last year. In Q4 2020, the top 7 cities saw total housing sales of about 50,900 units.

Sustained revival or a flash in the pan?

The long-awaited housing market revival was underway even before the pandemic began to subside—whether it will last well into next year and beyond remains to be seen.

The normal laws of the market will soon begin to take hold again. Increased demand leads to increased property prices and increased consumption, and a drop in inflation leads to higher lending rates.

Nevertheless, the fundamentals for a sustained revival are strong because the demand is considerable, driven by end-users who long to fulfil their long-cherished aspiration to own homes.

The onus of fostering and nurturing this demand long beyond the festival season is on the RBI and government support and interventions and on developers who decide at what price they should sell their properties.