Millennials In Bengaluru Have Given Up The Idea Of Buying 'Unaffordable' Houses

Property sales in Bengaluru are on the rise after a prolonged lull, but it is unlikely that it will reclaim the dramatic rates of growth it saw in the middle of the previous decade. A big reason is the shift in the minds of young professionals. Many are deferring purchases and many others prefer to stay in rented apartments.

The reasons are many. Apartments are no longer affordable. And affordable ones tend to be far from places of work, and involve tedious commutes. Also, many youngsters are not sure whether their work will keep them in Bengaluru for long. They worry their ¡°asset might turn into a liability¡±.

¡°Young people are waiting more than before as the properties within their budget are in the fringes of the city from where commuting is a problem. They prefer to stay on rent closer to their workplace,¡± Ram Walase, MD of housing firm VBHC Value Homes, says.

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High costs, long commutes dampen property purchase

Home Loan Conditions Have Also Become Onerous For Youths

Manasi Shah, 35, is from Ahmedabad and works in network gear maker Cisco on the Outer Ring Road (ORR). She has been in Bengaluru for five years, but still does not feel the need to buy a house. ¡°My father has been telling me to buy a house considering my steady job. I checked a few properties and figured out how to finance it, but it still does not feel right,¡± she says.

Owning an apartment does not figure in Manasi¡¯s priority list. ¡°Our work is such that I do not know which city I will end up in after a few years. If I buy one, I¡¯ll feel bound to the city. I do not want this inflexibility,¡± she says.

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There is also the commute issue. The 2BHK apartments in gated communities that Manasi liked were priced between Rs 65 lakh and Rs 85 lakh. ¡°I will end up in some interiors of Electronic City where there are no good roads or social infrastructure. I would rather pay some Rs 17,000 a month and stay right behind my office than shell out Rs 50,000 or more in EMIs,¡± she says.

Whitefield, Sarjapur Road, HSR Layout and Electronic City have many wellconstructed apartments, with modern-day amenities and good restaurants and malls nearby, at rents between Rs 16,000 and Rs 20,000 a month. With Bengaluru¡¯s major offices located in that part of the town, youngsters feel it makes more sense to stay on rent closer to their workplace.

A decade ago, it was difficult to find someone who was not looking to buy a house ¡ª even those who were fresh into the job market. Any gathering would inevitably involve discussions about property. But those were days when Bengaluru property was more affordable, loans were easy to obtain, traffic wasn¡¯t so bad, and the income-tax rebate on housing loan interest was a huge attraction.

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But then came the global financial recession, jobs became uncertain, salary increments slowed down, and banks tightened loan conditions. Today, if you are buying a Rs 50-lakh house, a bank won¡¯t finance more than 80% of it, which means you need to put in Rs 10 lakh from your pocket. Not easy for youngsters.

Shantanu Mazumdar, senior branch director at property consultancy Knight Frank Bengaluru, says that while the EMIs (equated monthly instalments of loans) have shot up, salary and increments have not kept pace with it. ¡°There is a big mismatch,¡± he says.

Karen Sharma, 28, who started working six years ago and now works in a US MNC, says a house is a good tangible asset for a rainy day. ¡°One has to buy what one can afford. At this stage of my career, it is difficult to purchase. The prices are high and it does not look like I can afford one in another five years," she says.

There are other things she wants to spend on: travel, hobbies, socialising. ¡°A lot of my income goes into these, and a house is dropping in my priority list,¡± she says.

Builders are trying to woo youngsters with smaller, more affordable units. Independent property consultancies say there is good demand for properties ranging between Rs 50 lakh and Rs 60 lakh.

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But even these tend to be on the fringes of Whitefield, Kanakapura Road, KR Puram and Jalahalli. A mediaperson purchased an apartment in KR Puram, but could not stay there as the distance between her house and office was too much for a daily routine. She eventually rented an apartment in Indiranagar.

Nilotpal, who has been in Bengaluru since 2004, has been looking to buy a flat for the past five years but was not getting anything he liked below Rs 70 lakh, which was beyond his budget. He eventually zeroed in on one in Yelahanka, but not from one of the big property brands. It cost him Rs 55 lakh, which was a good deal considering that he works out of Manyata Tech Park nearby and his wife works in a school in Yelahanka. ¡°The rates of the bigger builders were too high,¡± he says.

Some feel you must be careful when going with unbranded builders. ¡°The large builders get things like occupancy certificate easily, but not so the smaller ones. I will look closely at all legal factors as I don¡¯t want to get into a mess,¡± says Rajarshi, 33, who is hoping to buy a house in Bengaluru, now that he has been here six years.