Millennials And Homeownership: New Trends Shaping The Real Estate Market

The millennial generation, those born between 1981 and 1996, is the largest cohort in history to enter the real estate market. Their buying habits and homeownership patterns are reshaping the industry, influencing the way properties are bought, sold, and lived in. As Gen Z begins to enter the workforce and explore property options, there’s much they can learn from how millennials are redefining homeownership.

Thus, this article will explore some of the new trends that the millennial generation has introduced in the real estate market supported by factual data and examples and would also offer some recommendations to Gen Z homebuyers.

Delayed Homeownership: Renting Over To Buying

Millennials are tagged the ‘renting generation’ because they have postponed buying houses for the most early portion of their employed life. While the baby boomers, for example, bought their first houses in their late twenties, millennials have been delayed from making home purchases due to the following factors:

Student Loan Debt: The average millennial in India has considerable student loans hanging over their heads so saving a deposit for a house is impossible.

Changing Priorities: There is a tendency among millennials to place more importance on experiences, overseas trips, workplace changes and such rather than settling down early.

High Real Estate Prices: Even for those who are looking to build their careers in major cities such as Mumbai or Delhi or even Banglore as the property prices have begun to skyrocket, limiting the ability of the millennials to own houses at a younger age in their careers.

Renting a property seems a more ‘sensible’ decision for them. In a survey carried out in 2019, it was found that 56% of Indian millennials would rent rather than buy property, and Indian cities like Bengaluru and Gurgaon have put a premium on rental markets magnetised by the high cost of buying houses.

The Shift In Style to Look for the Perfect Home

One of the major changes that the millennials brought about is that of purchasing a home through embracing a digital approach. This ladder uses technology to seek and make any decisions regarding real estate.

Online Listings: Millennials like to look through property portals, real estate application software, and check out the virtual tour option before making the move to the physical location.

Social Media Influence: With the use of Instagram, Pinterest, as well as youtube, people are searching for houses, seeking interior design ideas, opting for real estate concerning various aspects.

Virtual Reality (VR) and Augmented Reality (AR): Other developers have taken the initiative of incorporating VR/AR technology to enable virtual home tours where prospective buyers do not need to be physically present at the property.

Virtual property tours on a property listing website in India rose by 30% in 2022 noting that millennials were the largest target audience. Property Souk has also noticed an increase in the number of clients making appointments for consultations after they have had their virtual tours through social media marketing.

Eco-Friendly and Sustainable Homes

Unlike previous generations, Millennials are more focused on the environment when it comes to home ownership. Over the next decade, they would be more willing to purchase homes that would focus on:

Sustainable Architecture: Houses that are built with energy-efficient principles, acceptable materials, and lower carbon emissions are indeed on the rise.

Green Certifications: There is a considerable market for the construction of LEED buildings which strictly adheres to green building guidelines.

Smart Homes: Features of smart home technologies are a pleasure for young people who also like combining energy-efficient appliances, using smart thermostats and power generation from solar panels. 

According to a 2021 survey by Knight Frank, 76% of Indian millennials said they would pay more for a sustainable home, indicating a clear trend toward green living.

Community and Lifestyle Amenities

Millennials prefer to use lifestyle instead of traditional metrics such as square footage or other held onto beliefs that the previous generation highly relied on while they consider a home as a potential buy. As a matter of fact, they are more likely to invest in homes that offer:

Conveniences: Coffee shops, co-working spaces, gyms, parks, and easy transportation are a big sell.

Working-from-home friendly: The concept of remote working means that today’s millennials require apartments with dedicated offices, fast internet access, and shared offices close to the house.

Amenities for Health and Wellness: Most modern housing projects encompass wellness centers, yoga studios, and other outdoor spaces in their design, keeping the millennial buyers in mind.

A survey conducted by JLL in 2022 states that two-thirds of the millennials in Indian metros like Mumbai, Delhi, and Hyderabad instead prefer residential complexes offering lifestyle amenities like a gymnasium, swimming pool, community center, etc., over standalone properties.

Financial Acumen: Availing Schemes and Low Interest Rates

Millennials are quick to leverage the government-initiated programs that facilitate them with easy entry into home ownership:

Most of the Indian banks have reduced the interest rates in home loans post-pandemic, which attracted more millennials towards house ownership. The millennials with a comfortable income and good credit scores have locked in loans at 6.5%-7.5% interest rates.

Smaller, More Affordable Houses: Size is No Longer 

While previous generations moved to the suburbs in the pursuit of bigger and better, millennials would prefer compact, more affordable versions closer to city centres. Smaller properties lighten the load of large loans and a huge chunk of time, efforts and money spent to maintain the property. This also serves their minimalist living approach which is highly popular among them.

Studio Apartments: The small, compact functional homes have achieved immense popularity in recent times and hugely sought after, preferred and loved.

Micro-Homes: In high-end markets like Mumbai, micro homes or homes that can go to as low as 300 sq. ft are not a rare sight. It promises affordability for the millennial buyer without compromising on location.

In 2021, a report published by Anarock Property Consultants found that 1 BHK/studio apartments make up to 45% of property sales in urban regions with millennials becoming the majority buyer segment.