Kolkata: Owning a home is a dream for most youths who have started earning. But how much of a sound financial decision is it? Employees and professionals are becoming more and more mobile. They are also looking at investment differently from the earlier generations with rising income and a plethora of investment opportunities. In this new climate how does one view the issue of owning a home? Ankita Luharuka, CEO, Alliance City Developers examines this important issue.
“Homeownership is still very important to Indian families, but the discourse now is significantly more complicated than it was a decade ago,” she says. Buying a house was usually influenced by emotional and social wants. Today, it is more and more a financial decision with buyers considering their budget, long term value creation, lifestyle needs and overall financial readiness prior to making a purchase.
Obviously there is not straight jacket of an answer. “For families planning to stay in a city for the long term, homeownership offers greater financial stability compared to renting. Aside from insulating households from escalating rental expenses, owning a home helps families to gradually accumulate wealth in a tangible asset. Over time residential real estate has the potential to generate wealth while also acting as a place to live, distinguishing it from most other investment opportunities,” she said.
Buying a house should never be seen as the only way to get rich. “The choice should be based on the person’s stable income, ability to pay back the loan and long-term financial goals. Potential buyers shouldn’t take on too much debt just to buy a house. Having enough cash on hand, emergency savings and a well-balanced investment portfolio are still very important,” observes the CEO of Alliance City Developers.
Another big change is that people who buy homes today know a lot more than people did in the past. They’re not just looking at prices they’re also looking at how trustworthy the developer is, how well the project has been executed in the past, the quality of the building, the location, the progress being made on infrastructure and how long people will be able to live in the area. This shows that India’s home real estate market is getting more mature and making smart decisions is becoming just as important as finding a good deal, says Luharika.
Looking at things in the long term home real estate will continue to be a big part of how Indian families make money. A home is different from other assets because it provides both financial value and social security. However, buyers shouldn’t think of buying a home as their only investment. Luharika advises that it should be viewed as part of a diversified financial plan. A balanced approach, with financial assets like stocks, mutual funds and enough savings in addition to homeownership, is likely to make people more financially stable in the long run.
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Avijit Ghosal has been writing on topics of business, industry and investment for the past three decades. He also writes on the broad economy, infrastructure and issues in banking. He has worked for economic dailies such as the Business Standard, The Economic Times, business magazines such as Business Today, English broadsheet the Hindustan Times and Bengali daily Anandabazar Patrika before joining TV9 Network.