Prices of residential properties are soaring at a steady pace in metropolitan cities. In view of that, and the concomitant rise in population of the young working age group, it has been noticed that there is a sharp increase in renting out of properties. According to a recent survey, a record 82% of renters say renting is preferable to owning a home, up from 67% just a year ago.
The demand for renting properties is chiefly driven by millennials who are not purchasing a home either because they don’t want to or because they can’t. This creates a unique opportunity for existing home-owners as they can be assured of a steady income source by renting out properties such as the luxurious 2-bed residences in Goregaon.
Now, let us delve deeper to understand what the factors are shaping an average millennial’s renting behaviour:
Unaffordability
This is an obvious reason. With rising prices of residential properties in metropolitan cities, it has become almost impossible for people with low income to afford a big and spacious home. The cost of housing is having a significant impact on households of every age, size and location, with instant purchase or full payment getting more and more difficult. It remains a key matter of concern when millennials are faced with the question of whether to rent or purchase a home. Millennials find it easier to pay monthly rentals than repaying home loan amount and interests.
Student Loan Repayments
For millennials and many Gen X-ers, there is also the mounting burden of repaying high-interest student loans and the rising cost of childcare in young, nuclear families, which are having a significant impact on their monthly budget. If they still want to buy a home, they have to resort to bank loan. Often, the initial down payment itself takes up an entire decade to collect. As the bank interest rates are on a hike too, it adds to the difficulty in owning a home. Moreover, taking another loan is too much of a burden and considerably reduces financial freedom, something which millennials are not easily keen to forego.
Simply Not Interested
Hard as it may be to believe, the other reason why millennials are not buying a home yet is that they just don’t want to. Traditional wisdom might suggest that buying a home is a good way to settle down and make an investment. But millenials have their own rules. Plus, ownership of property comes with lot of responsibilities, something the millennials do not want to partake. The responsibility includes the burden of incurring several other costs of homeownership such as buying new furniture, payment of taxes, maintenance and repairs, renovations, insurance and other miscellaneous expenses. Millennials seek mobility; they prefer to move around and travel, unlike the older generation that craved stability and settling down at one place.
At the first instant, it may appear that the increasing trend of millennials preferring to rent properties over buying them is a bad sign for real estate developers, a deeper assessment would reveal that it is nothing but an advantage to the already existing home-owners who can lease it out. The high demand for rental properties also puts them in a better position vis-a-vis the renter so that they can quote their own price and earn extra income. Plush and sophisticated 2-bed residences in Goregaon’s precinct can earn assured high rental incomes on a regular basis from millennials working in Mumbai. Properties like these fetch home-owners an additional source of income and the best utilisation of their luxe property. To that end, they could also consider investing in the luxury apartments in Thane, Mumbai or reside there because they are much more spacious and peaceful, being located slightly away from the hustle-bustle of the city.
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