Considering the current COVID situation, homeownership has become a priority for millennials due to the stock market volatility and financial sector uncertainties. However, has it ended the buying vs renting dilemma?
During this pandemic situation when home buyers have postponed their property purchasing decision, it is the millennials who are actively searching for homes. Nearly half of the millennials living in rented homes have realized the significance of owning a property and have started opting out of the renting option. According to recent market reports, millennials are now increasingly preferring homeownership post-COVID-19 over renting.
Renting scenario before COVID
Before the COVID outbreak, the trend of renting a home over buying had been increasing in metro cities. Due to the nature of their jobs, millennials who did not want to stick to one place preferred renting as it offered flexibility and freedom of movement. Moreover, staying near one’s workplace was preferred, however, buying a home near commercial zones was too expensive. This is also a prime reason why renting was preferred in pre-COVID times.
Situation post COVID
With the focus on social distancing norms, there has been a significant shift from renting to buying a home among the millennials. With the COVID outbreak, work-from-home became the norm and a sense of security and safety became a priority. They now realise the significance of owning a roof over their heads during such uncertain times. Also, co-living spaces, which were a common choice for youngsters and bachelors, are not considered safe any more. This has also eased the buying vs renting dilemma for some.
Tangible asset during this uncertain time
The security of owning a physical asset during the COVID-19 situation has led to an increased demand for residential real estate. Owning a home during this uncertain time is not only a safe abode but also a sound investment. Millennials have a high disposable income, they are now looking for sustainable investing options. Considering the current scenario, millennials are actively searching for an alternative source of income to ensure a degree of financial security, and investing in real estate is the safest option.
Ready to move-in homes have become the preferred choice
With the advent of the work-from-home culture, people have been spending a lot more time inside their residences that has led to a significant shift in their preferences for residential properties. Buyers now want to customize their home to create a space for home office. With the lack of need for renting an apartment closer to workplaces due to the work-from-home culture has motivated consumers to own a property in their hometown. Moreover, due to the dearth of labour in the market, there has been a delay in the under-construction projects resulting in increased demand for ready to move-in homes.
Low-interest rates
Home loan interest rates have recorded a historic low of 15 years, which has made homeownership affordable during this unprecedented time. This interest rate as low as 6.95% is a huge boost for home buyers, which was made possible due to the multiple rate cuts announced by the RBI this year. Moreover, with the reduced interest rate, a home buyer can save a considerable amount.
Safe investment option
Investing in real estate has become the new normal with uncertainty in the stock market. Real estate might not offer immediate returns but it is considered less volatile than other market-driven investment options. Moreover, since real estate is not traded on exchange the prices are not expected to fluctuate overnight.
After the COVID outbreak, real estate is witnessing a change in consumer behavior and perception over the last few months. Owning a house is now being seen as a safe and secure investment. Moreover, with low home loan interest rates, this is the right time to negotiate and strike the best deal.
While the perceived benefits of owning a home has become glaringly real due to the pandemic, there is no guarantee that the millennials, being a whimsical class, would stick to this trend once the pandemic is over. We would have to just wait and see!
