Real estate: Home loans are the top choice for buyers to purchase apartment, report finds

Home loan: Acquiring a home is often seen as the ultimate achievement of most Indians, signifying financial stability and security earned through diligent saving and hard work. The process of purchasing a home can be both exhilarating and overwhelming. The initial and crucial step in buying a home is determining your budget and how much you can afford. Very few individuals can buy a home outright with cash, which is why most prospective homeowners turn to securing a loan.

A study conducted by Knight Frank, titled "Banking on Bricks," surveyed 1,629 urban homebuyers in India and found that 79% of respondents preferred utilizing home loans to finance their purchase. The report highlighted that customers expect banks and financial institutions to offer competitive interest rates, flexible loan terms, and quick approval processes to facilitate their home-buying journey.

According to the survey results, approximately 80% of respondents expressed a preference for home ownership, while 19% indicated a preference for renting. The remaining participants were uncertain about their housing preference.

“Our latest survey highlights this continued preference for homeownership, with 80 per cent of respondents aspiring to own homes and a growing trend toward premium properties, particularly in urban areas," said Shishir Baijal, chairman and managing director of Knight Frank India. 
 
Baijal emphasized the importance of a strong real estate sector that supports India's overarching development objectives, with the banking, financial services, and insurance sectors playing a key role through providing services such as home loans, investment options, and risk management tools. This is complemented by the integration of new technologies and advancements in infrastructure.

Reasons for purchasing a home 

According to the report, there is a clear distinction between the investment preferences of Baby Boomers and the property upgrade preferences of millennials. Millennials and Gen Z are at the forefront of the trend towards upgrading and purchasing homes for personal use, with 39% and 36% respectively. On the other hand, Baby Boomers show a stronger inclination towards investments (29%) and retirement plans (15%).

In total, 37% of survey respondents are opting to upgrade to a better home, indicating a shift towards mid-range and luxury housing that was previously concentrated in specific cities but is now spreading to Tier 1 cities in India. The remaining 32% are first-time homebuyers looking for homes for personal use, 25% are investing in properties, and 7% have cited reasons such as retirement or acquiring a second or vacation home.

Top priorities
THe survey found that approximately half of respondents prioritize location when purchasing a property. Other important factors include size and layout, affordability, builder's reputation, proximity to workplace, amenities, financing options, and future resale value.

Interestingly, there is almost an equal emphasis on property size and layout and price and affordability, with 45% of respondents focusing on each aspect. This indicates that homebuyers are keen on getting value for their money while also finding a space that suits their lifestyle.

The report also revealed that 52% of respondents prefer apartments, followed by studio apartments at 19% and independent houses or villas at 17%. Gated communities and plots of land are less popular choices, selected by only 7% and 5% of respondents, respectively.

Furthermore, the reputation of the builder holds a significant weight of 35%, closely followed by the proximity to the workplace at 33%. These factors underscore the high demand for reliability and convenience, which are pivotal in boosting buyer confidence in their investment over the long term.

In addition, amenities are increasing in importance, accounting for 32% of buyer considerations. Beyond simply purchasing a home, buyers are now seeking enhanced living experiences that come with integrated facilities such as gyms, parks, or co-working spaces.

In terms of financial considerations, financing options are crucial at 29%, while future resale value holds a weighting of 22%. Both affordability and long-term investment potential are key factors in the decision-making process, especially as more buyers are drawn towards high-end properties.