More youngsters now own homes

Source: Deccan Chronicle

M ore people in their 30s are buying houses these days, thanks to income tax concessions and loan schemes with affordable equal monthly installments.
Two decades ago, the average age of people who bought houses was between 55 and 58. Other factors responsible for this 'youthful' change are exponential increase in incomes of young professionals and high rents charged by property owners on apartments and houses. Loans are also easily available now, which was not the case 20 years ago. The trend of more young professionals purchasing houses was noted in an analysis conducted by industry chambers on data obtained from major real estate developers such as DLF, Prasanth, Omaxe and Unitech.
There is also a change in the 'renovation' pattern. Earlier, renovations were carried out when house owners were around 60. But now people carry out large-scale renovations when they are between 45 and 48. "The biggest house buyers nowadays are younger people," says Mr Karunakar Rao, a developer. "Since the organisations they work for are willing to pay the interest, it is only a matter of signing on the dotted line."
Assocham president, Mr Venugopal N. Dhoot, said there was a general impression that the number of people who take home loans had come down because of high interest rates.
"But the fact remains that the effective interest rate on a loan of Rs 15 lakh works out to 6.1 per cent though the professed rate is 11.25 per cent," he added. "This prompts more youngsters to buy property and houses."
He pointed out that the sit-uation was likely to improve
further with the recent cut in home loan rates by banks. Most youngsters consider houses a worthy investment that will give returns in the long run.
Average return on investments in commercial property in India is 10-12 per cent in comparison with 5-7 per cent globally.
"I see a lot of young people going for housing loans," says Amish Mehta, a loan consultant with a multinational bank. "They are mostly on their first jobs and their parents usually stand guarantee for their loans."
P. Shwetha Reddy, a 27-year old HR manager of an e-learning firm, said she had faced several problems as a tenant, which forced her to buy a house.
"Even for installing a geyser I had to seek permission," she said. "So I decided to buy a flat. Further, I wanted to claim income tax deductions and so I took a home loan of Rs 20 lakh. Now I am happy."
Mr Atluri Subba Rao, president of the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI), feels that if real estate sector has to grow, investment has to become broad-based. "The common man must have an opportunity to participate in the growth of this sector," he adds. "The time is probably ripe to introduce concepts such as real estate investment trusts to increase the velocity of transactions."