With the beginning of 21st century, the real estate market in India has seen a transition in the average age of homebuyers – which has come down from 45-50 years to 25-30 years. Earlier, people used to invest in real estate in their late 40s or after they got married.
However, today, the scenario has completely changed thanks to the availability of easy finance options and high disposable income.
If you fall into the bracket of 25 to 30 years of age and are currently hunting for a property, here are some questions you should ask yourself:
- What is the purpose of buying property, is it investing or staying?
- Are you financially ready to invest in real estate?
Let us take a look at these questions in depth:
What is the purpose of buying property, is it investing or staying?
Mostly with every family, investing in real estate is financially the biggest decision. There could be many reasons why you want to invest in a property:
Social pressure – Marriage, Peer pressure
Mitigating rental stress
Whatever the case, please don’t rush into taking any decision. Often we find that a lucrative project has been launched by an eminent builder, or there are less number of apartments left in a property that you find irresistible. But it helps to make informed decisions & sufficient amount of homework can help make a better choice. Make an investment only when you are completely ready with sufficient funds & right amount of information in your hands.
Do your finances look good in near future for an investment in real estate now?
Before closing any property deal, think how stable your income is, how secure your job is. Buying a property at a young age is a costly affair and long term investment. Many financial instruments, SIPs or schemes help you stay prepared for sudden expenses in life – medical, education, travel, functions & such expenses that must be made while your EMIs are parallelly getting deducted from salary. One often can’t escape these.
Take a look at how much money you are left with after reducing tax, liabilities, EMIs & then find out if & where you can invest this amount – even a small amount of investment is good to start you on a habit of keeping investing & staying secured.
How strong are your current budget and savings?
One of the major chunks of your current savings is going to go in down payments. Do you have enough savings to make an upfront payment? If you are paying a very less amount in the initial stage of payment, then is the debt coming up at higher interest rate?
Do the math, it helps to reach out to a friend or a realty advisor & sit with them for a good half an hour doing some number crunching. Educate yourself so that you can take decisions on the basis of data.
Here are the benefits of investing in real estate at a young age
1. Tax Benefits: Under section 80C of Income Tax, tax incentives are offered on repayment of home loans. However, the main benefit of buying a property at a young age is that you can claim tax deductions, in case if you have applied for a home loan. As per Section 80C of Income Tax Act, one can claim tax deductions of up to Rs 1.5 lakh every year on Principal repayment of a home loan.
2. Safest Investment: If taken carefully, then investing your hard earned money in real estate will be a safe investment decision. If you buy an under-construction property or a property in a developing area, there are more chances of you getting good returns in the future and it may benefit you in your child’s education, offering protection in old age and financing other property purchases later on.
What are the major factors responsible for the emergence of young home buyers in India?
1. High Income: In comparison to last few years, the salary of employees has increased considerably particularly in the private sector. With an increased supply of disposable income in the hands of young professionals, the gap between salary levels of working professionals in India and developed countries has narrowed in recent years – resulting in the emergence of young home buyers.
2. Easy Financing: Introduction of home loan is another essential factor for the emergence of young home buyers in India. Many leading banks and housing finance companies offer home loans to young professionals depending on their credibility.
3. Modern Mind-Set: There is a huge change in the thinking of a young generation. Young real estate buyers give importance to financial and emotional security, and there is lesser tendency to go with decisions that might require compromise. This is a good sign for the economy & the real estate industry. Better homes are being built for the buyers & overall quality of construction from well-known construction companies has been going upwards due to changing customer mindset. Even some of the offerings of interiors & amenities have improved in housing projects.
Investing in real estate is always beneficial for buyers and investors. But it is more beneficial when someone plans at a young age or at the beginning of the professional career.