Estimated reading time: 5 minutes
Gen Z is entering the real estate market earlier than Millennials, driven by a strong preference for luxury and premium properties. With over 36% of Gen Z actively seeking homeownership, this generation values financial independence and is capitalizing on accessible home loan options to secure high-quality urban homes.
As affordability takes a backseat, Gen Z’s shift toward luxury housing is reshaping the future of real estate, marking a significant change in homeownership trends.
Understanding Gen Z’s Motivation to Enter the Housing Market Early
Gen Z views real estate as a means to achieve immediate financial security. Supported by favorable loan options and rising urban incomes, this generation is more eager to invest in property, especially in premium urban locations.
Changing Attitudes Toward Homeownership
Gen Z is stepping into homeownership sooner than Millennials, driven by aspirations for stability, investment potential, and financial independence. The Knight Frank survey reveals that Gen Z homebuyers have shown a unique inclination towards purchasing property early, with over 36% actively looking to buy, marking the highest engagement across age groups.
Financial Factors Enabling Early Home Purchases
Increased disposable incomes and favorable financing options are key enablers for Gen Z’s homeownership journey. Economic stability, particularly post-pandemic, has resulted in many young buyers securing home loans with confidence, especially as competitive interest rates and flexible terms cater to this generation’s needs.
The Role of Home Loans in Gen Z’s Real Estate Journey
- Key Financing Tool:
Home loans are crucial for Gen Z, enabling early entry into the real estate market.
- Loan Dependency:
83% of homebuyers in the INR 1-5 crore income range rely primarily on home loans.
- Blended Financing for Wealthier Buyers:
Higher-income buyers often combine home loans with personal savings, unlike Gen Z’s heavier reliance on loans alone.
- Empowerment Through Accessibility:
Tailored loan options allow Gen Z to invest in premium real estate, supporting their desire for early homeownership.
Comparing Millennials’ and Gen Z’s Home Buying Patterns
- Millennials’ Approach:
Millennials often buy mid-career, favoring high-value properties that align with long-term investment objectives.
- Gen Z’s Early Entry:
Gen Z is entering the real estate market sooner, motivated by a desire for immediate ownership and city-based living.
- High Demand in Bengaluru:
Millennials and Gen Z collectively account for over 60% of property purchases in Bengaluru.
- Investment Range:
The average purchase size for these groups ranges from Rs 70 lakh to Rs 1.1 crore, reflecting their preference for premium properties.
Why the Demand for Affordable Housing is Declining
The demand for affordable housing has sharply decreased, with properties priced below INR 5 million dropping from 54% of sales in 2018 to just 26% in 2024. This shift reflects rising real estate prices and evolving buyer preferences, as younger buyers seek homes that align with modern lifestyles and amenities.
Why the Demand for Premium and Luxury Housing is Increasing
Luxury housing is on the rise, with properties above INR 10 million now accounting for 43% of sales in 2024, up from 16% in 2018. This trend is supported by affluent buyers and the growing middle class, who seek larger, well-equipped homes. The shift is particularly prominent in cities with strong economic growth and urban infrastructure.
What Gen Z and Millennials are Preferring in the Current Market
Both generations lean towards premium properties in prime urban locations. Gen Z, however, is more flexible, showing a higher preference for under-construction properties, allowing for customization options and modern facilities. Millennials favour ready-to-move properties that reflect stability and immediate returns.
Future Trends of the Real Estate Market
- Growing Demand for Premium Housing:
The trend towards high-value properties is expected to continue as buyers prioritise luxury over affordability.
- Urbanisation and Income Growth:
Rising urbanisation and higher disposable incomes are driving demand for premium properties, especially among younger generations.
- BFSI Sector’s Role:
The Banking, Financial Services, and Insurance (BFSI) sector supports this trend by offering accessible home loans and financial products tailored to high-value real estate purchases.
- Focus on Luxury Projects:
Developers are anticipated to increase luxury housing projects, aligning with the preferences of affluent and middle-class buyers who seek larger, well-equipped homes.
- Long-Term Investment Appeal:
Premium properties are increasingly seen as valuable long-term investments, attracting buyers seeking both lifestyle upgrades and financial growth
Conclusion
Gen Z is reshaping the housing market by entering earlier than Millennials and prioritising luxury over affordability. With strong financial independence and accessible home loans, they favour premium urban properties. This shift signals a vibrant future for high-value real estate in India, driven by Gen Z’s evolving preferences.
Credit Dharma’s home loan experts with decades of experience can help you shape the plan for your home loan. Connect with Credit Dharma today for a free consultation call.
Frequently Asked Questions
Gen Z seeks modern, well-located homes with premium amenities that support urban lifestyles, prioritising flexibility and quality over affordability.
Approximately 36% of Gen Z is actively seeking homeownership, with 71% preferring to own a home.
Millennials and Gen Z are driving the most demand for luxury housing, with Millennials increasingly investing in high-value properties as they reach mid-career, and Gen Z entering the market earlier, prioritising premium homes.
The real estate market in Bengaluru is experiencing strong demand, with Millennials and Gen Z accounting for over 60% of property transactions. The average ticket size ranges from Rs 70 lakh to Rs 1.1 crore, reflecting a shift toward premium and luxury properties.
HDFC Home Loan
SBI Home Loan
