Tag Archives: Youngsters and homes

To buy or not to buy: dilemma faced by real estate consumers

HYDERABAD: The demography of India is tilting favourably towards youth and with each passing year scores of young professionals are entering the job market. With hefty pay packages and ‘stars’ in their eyes, a sizeable chunk of these youngsters are indeed aiming for better positions and are poised for brighter careers.

But while the changing economy and the associated ‘perks’ are changing the lifestyles of the people; one quintessential Indian trait still lingers on. The desire to own a house. The increase in the well paid workforce is indeed providing a perennial demand to the real estate sector.

Name it anything, a place to settle in, a way of reducing expenditure or a simple investment opportunity, there are many incentives for owning a house. But while most people have a strong desire to own their abode, they, nevertheless, are deterred by many daunting obstacles.

And the first one of the lot is to take the very decision of buying a house. “We would like to buy a house but the very fact that we have to take a decision right way scares us. There are few variables that we have to factor in before taking this plunge,” Satish Kumar and Veena Rani, a couple working in IT industry, says. The dilemma that this couple face is that there is a possibility for them to move out of the country on a three-year assignment. “We have few choices here. We can buy a house now and give it on rent or come back to the country with better savings and buy a better house in a gated community,” Satish mulls. “And then there is the question of whether we will settle in this city. If we are not settling in this city, we will be struck with an investment that we cannot look after,” he adds.

While taking the plunge is a hard step for consumers, builders too advise that the decision of buying a house should be taken after careful deliberations. “If a person can afford to buy a home within his salary he should not have a problem in buying a home. Investing in real estate indeed makes for a sound economic judgement. But if a person has to take a loan to buy a house, he has to be careful before taking the plunge,” Janardhan Reddy, a builder observes. To help a person in taking the decision, Reddy gives a checklist. “A person has to decide as to whether he is buying a house or flat to settle in it or is he taking it as an investment. If he is taking it for settling down, then the distance from work place, connectivity and civic amenities available in the area play a major role in taking the decision. Typically such people would look for a house in the core areas of the city or those near their work place,” he says. But if a person is looking at buying the house only for investment purpose, he can go a little easy on these parameters. This, he explains, is because over a period of time any area in a city is bound to develop. “The real estate rates are bound to go up and by the time a person decides to sell his property, the area would have developed sufficiently and would invariably fetch him a good bargain,” he said.

The article was published in Property Plus supplement of The Hindu on May 12, 2012.

Young professionals preferring to buy house early in their careers

HYDERABAD: Suresh Kumar, a 26-year old software engineer is a busy man. He joined a leading multinational company three years ago and is now looking out to ‘settle’ in his life. While few years ago settling in life, at Suresh’s age, meant getting married, Suresh thinks otherwise.

Before getting married, Suresh is determined to buy a house. “I want to first buy a house and then only think of tying the knot. Buying a house before marriage is a better option as it will give me a semblance of security,” he says. And Suresh is not the only young professional with such ideas. Few decades ago, buying a house was the final step that a person would take to settle in his life. Most often, one would buy a house at the fag end of his career with the money that he accumulated during his log working life. This would give a modicum of security to a person in his penultimate years, or so earlier generations thought.

With the rise of new economy and with its inherent volatility, the situation is different now and younger generation prefers to own a house very early in their careers. “Though we are well paid, we do not have the job security which our earlier generations enjoyed. Without the security provisions like retirement benefits and stable pension, it is too risky for a young professional to wait till his retirement to buy a house,” Siddhartha M., an IT professional explains.

Apart from this, with sky rocketing house rentals, it also makes sense for a professional to purchase a house with loan and clear it with monthly instalments. This way, one can own a piece of property with almost similar cost that one would shell out if he stays in a rented house, he adds.

While these reasons are quite valid, buying a house early in the career can also have an investment value.

“In spite of economic downturn, the real estate market is on a stable upward trajectory. While financial instruments like shares and bonds can loose their sheen, buying a property will not only ensure that the value of your investment remains stable, it will also give a decent return,” Hari Krishna, an investment banker says.

With the ever booming population, the share of young professionals in the total population is set to rise in the coming decades and this means that real estate sector is in for a long term growth, Hari Krishna points out. This, he says, is because all these professionals will try to settle and own a house. In case a professional is forced to move out of the city because of his job requirements, he can either rent his house or sell it for a higher price. Both of these options are lucrative, Hari Krishna points.

The article was published in “Property Plus’ supplement of The Hindu on May 05, 2012.