The modern real estate environment in India leads to significant challenges for millennial hopes of residential property purchase. The combination of high real estate costs along with inactive incomes together with numerous system issues creates major hurdles for people trying to enter the housing market.
The research investigates the multiple reasons, one of the major reasons being corruption leading to this crisis, while suggesting different solutions to help future homebuyers.
The Post-Pandemic Property Surge
The Indian real estate market underwent a major transformation during the COVID-19 pandemic period. At the beginning of this period, the real estate sector demonstrated financial decline that allowed safe investors to seize available deals. The end of lockdown restrictions enabled economic expansion, which caused property prices to rocket in primary urban centers.
Shikhar Srivastava relocated from Kanpur to NCR after working remotely there for three years when he reached the age of 34. The property prices in NCR surprised the flat owner, Shikhar Srivastava, when he returned from Kanpur during the period of economic downturn. After costing ₹40-50 lakh back in the previous year, the price of 2BHK apartments soared to ₹70-80 lakh and 3BHK flats exceeded ₹1 crore in the market.
The price increases extend beyond the National Capital Region region. Real estate consultancy Colliers-Liases Foras shows homes in primary locations across India grew notably in cost throughout the past two years.
- The property values in Delhi-NCR experienced a 32% rise to reach ₹9,170 per square foot.
- In Bengaluru, the average home price rose by 31%, up to ₹9,976 per square foot.
- Home prices in Kolkata experienced a 30% growth as they reached ₹7,912 per square foot.
- The real estate market in Hyderabad experienced a 26% rise, which brought prices per square foot to ₹11,083.
- The real estate prices in Pune experienced a 24% growth that brought them near ₹10,000 per square foot.
- The average residential property prices in Ahmedabad have experienced an 18 percent growth.
- The Mumbai Metropolitan Region (MMR) held steady with minimal price growth as the market stabilized at an average ₹20,000 per square foot during this period.
Millennials: Caught in the Housing Trap
Categorizing 34% of 440 million people as the world’s biggest millennial demographic, the average age of 28 years makes India’s median population largely youth-oriented. Young adults choose to migrate toward major cities for better employment possibilities; thus, they create increased needs for residential and business spaces.
The modern generation has changed its housing preferences significantly during the past few years. The CBRE survey from 2023 demonstrated that 70% of millennials now desire property ownership after renting for three years between 2016 and 2019. This new outlook toward home buying has enhanced market demands among the existing competitive landscape.
Current times have created a difficult problem for the millennial generation. The pandemic’s positivities resulted in properties purchased by investors in Tier II and Tier III cities but these assets now present financial difficulties after market fluctuations. Rental income collected from the properties does not meet the EMIs, which pushes these individuals to pay out of pocket.
Workers based in metropolitan areas are required to pay high rental costs while they strive to make their home purchase possible. The dual cost of owning property plus leasing another one in cities gets farther away from reach for future homebuyers.
The Affordability Crisis: Root Causes
Multiple related elements merged into one have caused the housing affordability crisis throughout India.
1. Supply-Demand Imbalance
Major cities have experienced enormous housing demand growth because of their rapid expansion and the expanding middle-class population. Urban centers currently face severe housing competition because young professionals continue moving into the area.
The swift growth of housing demand has outpaced construction capabilities because of restrictive regulation combined with scant resources for affordable home development and restricted construction areas in the industry.
2. Investment-Driven Market
Real estate stands as a secure and profitable investment vehicle in India according to national standards. Research conducted by Anarock in 2023 shows that millennials believe real estate investment offers the most promising opportunities. Real estate prices keep rising because of investment-driven demand, which makes room for authentic first-time buyers to exit.
3. Stagnant Wages and Rising Living Costs
At the beginning of their professional period, young workers receive wages that do not rise with inflation rates. The rising expenses of living destroy their available money, which reduces their ability to build a savings fund or handle monthly house mortgage fees.
4. Corruption and Bureaucratic Hurdles
Deepak Parekh, who leads HDFC, explains that property costs grow substantially because of corruption. Mumbai construction projects require 48 separate approvals, which enable corruption to arise throughout their developmental process. Parekh asserts that removing all corruption from the development process would cut home prices by about twenty percent.
Industry officials observe extensive corruption throughout the property sector. Every approval step in the process requires payment so the final product reaches higher final prices. Parekh told interviewers that customers end up paying for every cent of corruption that happens in the housing sector.
5. Regulatory Inefficiencies
Some preventive laws have been eliminated yet regulatory system failures continue to exist. According to Parekh, developers must still obtain ULC authorization for building development even though the Urban Land Ceiling Act has been abolished, which causes additional expenses and postpones construction times.
Socioeconomic Implications
The housing crisis creates economic challenges that impact society on both local and nationwide levels.
Stagnating Social Mobility
Traditional social progress in India used to be possible through home ownership. When fewer young adults successfully purchase a home, society becomes less mobile, which increases existing social disparities.
Rental Market Pressure
Many young professionals who can no longer afford to buy housing suffer an increased economic strain on rental property markets because of rising rents and decreased availability of affordable apartments.
Financial Strain and Delayed Life Milestones
High rental expenses together with down payment savings obstacles make millennials postpone essential life markers, including marriage, child creation and formal education.
Solutions and Strategies for Aspiring Homeowners
Future homeowners who wish to purchase property can use various methods to deal with the present market conditions, which present significant obstacles.
1. Explore Emerging Suburbs
Young prospective homebuyers need to look past established cities and explore up-and-coming suburban areas since property prices in those locations remain accessible. The early commitment to underdeveloped locations produces substantial financial gains because markets appreciate steadily in the upcoming years.
New property seekers should avoid high-cost areas of main cities and seek out less expensive properties in suburban neighborhoods. L.C. Mittal of Motia Group, who directs commercial real estate development, expresses that adopting a wait-and-watch strategy is not optimal since prices in these areas will increase within the next 1 to 2 years.
2. Monetize Existing Properties
Investors in Tier II and III cities can pursue various approaches that boost their rental yields. The property transformation into alternative assets through financial investment represents a recommended approach, according to Govind Rai, who serves as Co-founder and CEO of real estate marketing firm Insomniacs Digital.
Student accommodation represents a large opportunity within the real estate market. Tourist places within the area create potential for the owner to transform their property into a bed and breakfast establishment.
3. Thorough Financial Planning
According to Adhil Shetty, who serves as CEO of BankBazaar.com, buyers need to perform full financial checks before house purchases. Loan sanction depends exclusively upon income evaluation by lenders. Before establishing your potential borrowing capacity, you need to determine the total of your ongoing expenses together with your Cibil score evaluation. Property owners must allocate a down payment that equals 20% of the house value.
4. Long-Term Perspective
People should treat real estate investments as a campaign that takes time to grow instead of rushing for quick returns. According to Govind Rai, one should recognize the temporary character of the recent price surge because it does not need to discourage homeownership. For the upcoming decade in India, there exists no unfavorable period for home investment along with no positive time to make acquisitions. A person should begin preparing for their home-buying decision. Only invest in houses after planning for the upcoming 6 to 8 years.
5. Research Infrastructure Developments
Investors who want to maximize their returns should search for neighborhoods under renovation because such enhancements create lasting value for residential properties. Anarock Group analyst Rahul Phondge advises people to maintain their properties because upcoming developments may make such decisions beneficial.
Policy Interventions Needed
The resolution of the housing crisis demands extensive policies to intervene.
1. Streamlining Approval Processes
Online system integration with single-window clearance functions enhances the speediness of project schedules and decreases corruption opportunities. According to CREDAI chairman Lalit Kumar Jain, there is no reason for builders to obtain several departmental no-objection certificates through multiple stops. The procedure should operate through one unified location instead of following numerous steps. Such a resolution would achieve its objectives by decreasing both human involvement and acts of dishonesty.
2. Effective Regulation
The Real Estate (Regulation and Development) Bill, introduced in 2013, aims to bring transparency to the sector and protect consumer interests. Proper implementation of this legislation could significantly reduce corruption and enhance accountability.
3. Expanding Affordable Housing Programs
The Pradhan Mantri Awas Yojana-Urban (PMAY-U) scheme has provided interest rate subsidies on home loans for eligible beneficiaries. However, the program needs updating, particularly by increasing income caps for each beneficiary category to keep pace with rising housing costs.
4. Increasing Supply
To address the supply-demand imbalance, Parekh suggests increasing the floor space index, developing infrastructure, building new cities, and rectifying faulty land policies.
Final thoughts
Many Indian millennials now view homeownership as a goal they can no longer realistically pursue, even though it was traditionally seen as a sign of success and stability for youth. The combination of rising property costs with unchanging incomes and bureaucratic complications, together with pervasive corruption, shapes a property market that bars entry for new real estate buyers.
Properties become unreachable for average middle-income Indians because corruption costs drive expenses up from approvals to construction works through to final price assessments. The unethical practice adds directly to making properties outside the financial reach of large segments of the public.
Leading change requires vigorous policy implementations. A combination of faster approval procedures together with enhanced regulatory oversight and expanded affordable housing schemes and intensification of supply creation will lead to meaningful change. When nations fail to address their existing deep corruption and inefficiencies, the housing market will likely expand inequality between social groups and, at the same time, slow down economic opportunities for future generations.
To earn homeownership, millennials need financial discipline combined with determination, yet building this market structure requires combined efforts between government institutions and developers and financial institutions to establish a system where ownership can actually become a feasible goal for generations.
