Millennials opting to buy properties in Noida rather than rent
Authored by Harvinder Singh Sikka, MD, Sikka Group
With housing prices rationalising coupled with the decreased home loan rate of interest the debate of rent vs buy has picked up momentum. After a lot of steps taken by the government to streamline real estate, millennials are fighting the urge to buy in Noida or stay at the rented apartment.
A lot of people will come and tell you that you can stay at lower rent in Noida then what is the need to buy. However, the scenario right now is that if you will not buy a house right away in few lakhs now you will not be able to buy that house even in crores after a few years. Buying a house is one of the biggest financial decisions one takes in an entire lifetime and the dilemma of ‘rent versus buy’ continues to perplex many people across salary brackets. Always keep in mind that you should not follow one-size fits all approach. The decision has to be made in your financial situation, which differ for different people.
Millennials are realising this as they are constantly working on their finances and weighing the option of buying a home that will help them build a property, which can give them good returns also in case, they want to sell after a few years.
Holistic decision: When it comes to deciding on where to live many factors come into pictures such as lifestyle, proximity to place of work, schools, hospitals etc and personal preferences. Then the decision to rent or buy also depends on the investments required and the funds available at hand.
Down payment factor: A lot of people think that they just have to make 10-20 per cent down payment and the rest will be given by the bank. However, experts feel that until and unless you are able to make down payment of about 40 per cent of the house cost, the risk is too high. With high disposable income, millennials have started working on arranging the maximum downpayment so as to cut down on EMIs, and they are keeping it at the level that is lower than the rents in good locations of Delhi.
Financial decision: When you buy a house you have a responsibility towards it and it means not only the payment of EMI but also the maintenance charges. You have to manage expenses so that you meet the demands of owning a house unlike the time when you live on rent. It is advisable to that you make an estimate of how much you can afford and do not just limit yourself to estimation of EMIs but other expenses too.
The location: Foremost thing to judge how a particular location is going to develop in future before making a decision. In metro cities where there is space crunch most of the development is happening in the suburbs and thus this consideration is of utmost importance. Noida has come out as the best places that has everything that a homebuyer looks for. Millennials also want to save the pain of shifting time and again from the rented flat. The mindset that is working is that once you own a house, you automatically get settled.
Price risk: When it comes to buying ownership is an issue. This comes up in case prices are expected to fall. If you are deciding to live in the property then it might not hurt but in case of investment, this factor comes as a shock. So if you have to keep a tab of the price trends and the likelihood movement of prices when you decide to buy a property. However, when renting this risk is minimal as you can always move to a place that is more financially suitable for you.
Adjustments required: When millennials take a decision to buy then they are also taking into consideration the fact that they have to adjust many things that are part of their lifestyle. The cost of owning a hose might force them to control their travel expeditions or their shopping splurges. Here they are deciding on the adjustments and making up their minds to buy to secure a good future.