Meant To Rent

As house prices refuse to climb down, the high cost of raising a 20% down payment is further locking large segments of society out of the housing market. The day isn’t far when a significant number of those under 40 will be living in rented properties.

Most of our young believe our metros will become cities of renters within the next generation. They say that renting rather than buying will become the norm because housing costs are taking up so much of their income that they are struggling to save enough to buy a home of their own. “A large part of us might have to wait until we receive an inheritance before we can buy a house of our own,” says Damini Singh, a 26-year-old software professional, who shares a three-bedroom flat with her boyfriend at Sector-29, Noida. “There is going to be a generation that potentially has to wait for inheritance almost to get themselves on the property ladder. Otherwise where do we get the 20 percent down payment for the house? We will have to save for years for a decent house deposit.”

Damini says the young, single, well-educated, well-paid professionals would rather live near to the amenities that city centre living offers such as being in walking distance to work, shopping and dining attractions and surrounded by other young professionals. “Since we can’t afford to buy a house, we are ready to pay a premium to live here,” adds her partner Siddharta Sharma, 29. Sharma, who went to a US university for his electrical engineering degree, says when banks write loans, they look at a number of factors, including the applicant’s credit scores and sources of income. “A key test they run is what’s known as the debt-to-income ratio, which measures what share of your monthly paycheck goes to paying down your loans. If your ratio is too high, it can be hard, if not impossible, to get a loan,” he reasons. “When the bank takes into account our other borrowing, such as student debt, credit cards, and car loans, we will never make it.” The majority of 20- to 45-year-olds are either unsure how government efforts to help first-time buyers will ease the struggle to buy a house, or do not think they will help. A random survey by Realtor Today found that almost 40% people did not know whether government initiatives such as Homes for All or Smart Cities will help to ease the struggle to get on the property ladder. Another 30% thought the schemes wouldn't work – but the same proportion believed they would. Almost three-quarters of younger people (70%) thought that the problems facing those struggling to buy their first home are in danger of causing a damaging split between those who can afford to do so and those who cannot. Three-fifths of the non-homeowners surveyed feared they may never be able to retire if they are forced to rent for the rest of their lives, while a fifth said they had already given up hope of buying. The increased demand in the rental sector from people who have struggled to buy a home has prompted rising rents. "Homeownership is clearly still an important goal for a lot of people, but fewer and fewer consider it to be something they will ever achieve,” says Rohit Sharma, a Gurgaon broker. “More needs to be done to redress the balance, both through making homeownership more accessible and offering more stability through the rental sector," he adds. Sharma says with homeownership now at its lowest level in last few years, our shortage of affordable homes is leaving more and more families with no choice but to bring up children in unstable and expensive rented homes. “There’s a widening gap between the haves and have nots in Delhi-NCR housing market, especially Gurgaon and Noida," he says. Another offshoot of the housing problem is that the young are taking the rather mature decision to live together sooner rather than later, based on how far wages will go in a city in which only the rich can afford to have their own space. Not only is the housing crisis retarding an entire generation's development, it's also speeding up the natural patterns of their existence. The capital sucks in bright young things from across the country like a black hole swallows a flimsy spacecraft. “Those who can't afford the high rents must choose between occupying a small room in a shared house for longer than their emotional maturity and tolerance of others can stand, or moving in with a boyfriend or girlfriend before they've even developed that very maturity and tolerance,” says Nishtha Gautam, 28. A post-graduate in journalism and PR, Gautam works as a content writer for an online realty portal in Gurgaon. She moved in with her boyfriend within two months of work when she realized renting alone meant tightening her purse strings way too much. Once these young couples live together, the logic goes, they're far less likely to split up if they're not right for each other. Because neither party wants to go back to renting the sort of tiny room in a house of three other people that their single, twenty-something wage will cover. “Housing should be a basic right, not just one more social structure creaking under the weight of inequality, collapsing before the eyes of a government more concerned with the developers of luxury penthouses than the development of the next generation,” Gautam says. “There is a growing divide between those who can get on to the housing ladder and those who are unable to raise the funds to buy. With house prices still at many multiples of income and mortgage lending at high loan-to-values limited and expensive, it is the cost of raising a deposit that prevents many from buying a home.” There’s nowhere affordable and it isn’t a matter of just moving further out and dealing with a long work commute. There needs to be more incentives for first homeowners. It’s important to think about overall affordability and the policies that both the state and the central government are pursuing need to be rejigged. For instance, you can’t have a decent two-bedroom house anywhere in Noida for Rs 25 lakh. While the Greater Noida (West) region is cheaper than the inner city suburbs, it’s becoming increasingly unaffordable for first home buyers selling at Rs 3,000 psft-plus. Yes, there are few builders offering around Rs 2600 psft, like a two-bedroom flat at Sikka Kirat Greens, Sector-10, Greater Noida (West), can be yours for Rs 22.70 lakh. But at Rs 2,650 psft, the flat measures only 890 sqft! That too, it’ll be on the 23rd floor and there are four different kinds of PLCs – green belt; park; 24-metre road facing; corner etc. Yamuna Expressway projects, which are a good half-hour drive from Greater Noida aren’t going cheap either. A 975 sqft flat at Ajnara Panorama is selling for Rs 27.4 lakh, while a 1,075 sqft flat with a builtup area of 850 sqft at Gaur Yamuna City is priced at Rs 28.70 lakh. But if you want a quality home from ATS, get ready to pay Rs 36.8 lakh for a two-bedroom flat (1150 sqft) at ATS Allure. Property prices in and around the Capital have seen a meagre one per cent increase, but surprisingly, rental values have surged as much as 16 per cent in just a year. Indicating a clear shift in consumer behaviour from the “need to buy a house” to the ease of living on rent near one’s workplace, rental prices in Greater Noida have witnessed a 16 per cent hike which is highest among all other regions in Delhi & NCR. “This could be because construction work on the Noida-Greater Noida Metro corridor commenced in June this year,” says a property dealer with his office at Greater Noida’s Alpha commercial belt. “While the metro link is slated to be operational in 2018, rental prices in the area have already skyrocketed,” he said.