Youngsters avoid ing Real Estates - Indian Real Estate Forum

lovebird · 15-03-09

Source: Economic Times

Youngsters shun realty as job losses increase
15 Mar 2009, 1049 hrs IST, Raja Awasthi & Neha Dewan, ET Bure

NEW DELHI: Guess what correction in the real estate market has done to the purchaser's age? It has pushed up the purchasers' age profile. During the boom,

the average age of the er had dropped to as low as the mid-20 s. But with sentiments not perking up, this segment too has witnessed a sharp drop in ing capacity and has pushed up the average age once again in the 35 plus age bracket.

SundayET did a thorough ground research and spoke to developers and bankers across the country as well as industry experts who agreed that there has been a significant change in the er profile in the last few months.

Says Navin M Raheja, CMD, Raheja Developers: "The young executives are now actually apprehensive about their jobs and future course of actions. They are in dilemma whether to invest now or not. Earlier, everyone used to get loans easily. Executives of MNCs are facing problems getting their loans approved as banks have really become strict, selective and are financing on the strength of the projects after thorough due diligence. Even if one gets a loan, it's the repaying capacity which makes one think twice and discourage young home ers from investing in property."

That's natural since low market sentiments, job insecurity coupled with a considerable stress on limited savings makes young customers shy away from home loans. Even people from the IT/ITeS industry who formed a major chunk of young home loan ers earlier are now significantly affected by the turmoil in global markets.

Rohtas Goel, CMD, Omaxe Group, is of the view that there is a distinct demarcation that can be seen in the er profile. "Mostly ers of affordable homes belong to middle-level working class of age group 27 years to 35 years while ers of luxurious homes belong to higher management working class or those who want to park-in their money for better returns starting from the age of 40," he says.

Many in the industry say that constant property appreciation in last three to five years and easy bank finance which went upto 85-90 % was earlier attracting young ers to invest in real estate. However, now with a reduction in property value, banks are now also expecting higher er committment by restricting lending to only 70-75 % of the total value. This is also a major reason why young ers are avoiding the market.

Says Rajiv Sahni, Partner Infrastructure & Real Estate Practice, Ernst & Young: "These factors put a direct strain on one's financial capacity, hence there is a reduced interest from career-starters to part with their marginal savings on real estate.

Anshuman Magazine, CMD, CB Richard Ellis South Asia agrees that a lot of youngsters will now not be able to afford housing easily due to the state

of the economy. A postponement of ing decisions in the short-term by this segment is thus expected. In fact the downturn in the real estate sector is visible as far as the home loan market goes. The home loan segment according to industry estimates, has witnessed a drop in offtake.

Many private sector banks across the board also confirmed that they have witnessed a considerable decrease in the number of queries from people seeking home loans in last few quarters. Says Sushil Muhnot, executive director, personal banking, IDBI, "Only people who are well-settled and who are getting a right price are coming forward for housing loans. That segment is mostly in the mid-30 s bracket."

AGE FACTOR

Sharp drop in ing capacity has pushed up average age once again in 35 plus bracket

IT/ITeS employees that earlier formed a major chunk of young home ers are now affected by turmoil in global markets

During the boom, average age of home er had dropped to as low as mid-20 s

Stress on limited savings is making young customers shy away from home loan

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16-03-09

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Originally Posted by Nataraajg007