Purchasing a home is not just a financial decision but also an equally emotional decision. It is not just the drive to own a home of their own that drives buyers to purchase a house; factors like the need to live in a smaller/larger living area, desired location also play a major influence in the drive. Buyers tend to consider their primary home as a foundation for life rather than just considering it as an investment.
With rise in disposable incomes, homebuyers also got on the move. Although the challenge of buying a home is quite high as it involves huge financial commitments, owning a home, which seemed like a farfetched dream once, is not so far now. The combination of dropping interest rates, tax breaks and rapidly increasing disposable incomes have led to the rise of the EMI investor, the small, leveraged second (and third, and maybe fourth) homebuyer, something that India had not seen before. Buyers purchased houses with loans and sold them two or three years down the line because prices had risen enough to prepay the loan and still make an enormous profit.
In India, the change in home purchasing pattern started with Gen X moving out of joint family culture to having nuclear families. With Gen X families largely having only one working member, purchasing a house could never be an impulsive decision. This ensured that there was a thorough research, many tours, a lot of planning and saving done before the purchase. For the millennial families, more likely to have two working members, possibility of purchasing a house became more affordable and feasible. The down payments scrapped from savings, gifts and funds from investments, investing in a new house got a higher preference than renting out or borrowing money to renovate and repair. Most of the millennials homeowners are first-time buyers, so they look for homes with value.
The buyers prefer agents to help find the right home to purchase so they can benefit from their agent pointing out unnoticed features and faults in a property. However, the role of agents is decreasing, as developers are becoming more transparent, and other non-agent intermediaries are offering the same services without charging the commission. For homebuyers, agents are increasingly becoming more menacing and repulsive.
The millennials generation (32% of buyers) is largely driving the housing market. Although the expertise of real estate agents is not entirely been replaced with the internet, there is tremendous amount of research done online before contacting an agent. The internet does provide the comfort looking at multiple options across locations; however, the benefits from working with a real estate agent are many. The younger buyers preferred agents helping them understand the process that goes into the deal as for most of them, it is more likely to be their first purchase. They are inclined to agents referred through a friend, neighbour, or relative, while the older buyers go with agents that they have previously dealt with to buy or sell a home. The millennials also tend to purchase homes closer to their previous residences whereas the older boomers are more open to exploring across locations.
The first step towards the process of purchasing a home is looking up properties for sale online. The process involved and documentations required for a purchase is also easily and readily available online, which made it a common trend among all generations. After the purchase of their desired property, Gen X and Gen Y live in their home for approximately 10-15 years before moving on to finding another new house whereas the older boomers plan to live in their home for approximately 20 years.
The priority of preferences also changed with the times. While the old boomers are inclined to owning homes closer to family and friends and located closer to good health facilities, the Gen X placed their preferences on convenience and quality of schools and other educational institutions. The millennials however, place high preference on convenience to their jobs and affordability. The younger buyers also consider commuting costs whereas the older buyers place more importance on landscaping and cost of utilities.