How do Gen Z look at home buying and renting?

The Generation-Z, commonly known as Gen Z are people who are born between 1997 and 2010. According to the EY Analysis of World Bank Population Projections and Estimates data for 2020, over 27% of the total Gen Z population is in India. Because they were born and grew up in the digital era, Gen Z have had the impact of the internet and social media widely in how they have been shaped, their decision making skills etc.

When it comes to real estate, they have had an altogether different approach as compared to their predecessors- the millennials. The oldest of the Gen Z i.e. most people born in 1997, 1998  etc. have already entered the job market and have bought a house by taking a home loan. Also, people who want to think more about the property to buy have opted for renting spaces until the decision is made. In this guide, we will study more on home buying trends by Gen Z. For your information, millennials are people born between 1980 and late 1990s. Gen Z were succeeded by Gen Alpha – people born between 2010 and 2024 and Gen Beta- people born between 2025 and 2039.

What do Gen Z prefer: Home buying or renting?

When surveyed for preferences regarding renting versus owning a home, a strong inclination towards homeownership emerges across all generations. According to a Knight Frank report titled Banking on Bricks, the overall, 80% of respondents express a preference for owning a home with only 19% opting for renting and a mere 1% remaining uncertain. This sentiment is consistent across generations: 79% of Baby Boomers, 80% of Gen X and 82% of Millennials favour homeownership, while Gen Z shows a notable difference, with only 71% preferring to own, and a high 27% leaning towards renting. The report mentions that this divergence in preference among Gen Z may reflect broader societal changes and economic realities that shape their housing decisions. According to the Knight Frank report, factors such as student debt, job market uncertainties, and a desire for flexibility are likely influencing this younger generation’s approach to housing.

Gen Z behaviour patterns on home buying

1)   Financially prudent

Gen Z are extremely cautious with their finances and prioritise financial stability over anything else. Reports mention that one of the biggest contributions for this thought process is the already existing lifestyle of the Gen Z which they wouldn’t want to compromise. Most Gen Z save enough for their down payment before proceeding to exploring and zeroing in on a property.

2)   Projects need not be limited to Tier-1 cities

While the pandemic introduced remote working to keep the ball rolling, the Gen Z has played a big role in normalising and continuing with this trend. With most offices including MNCs practicing work from home, the Gen Z are not tied to urban centres in Tier-1 cities and are open to exploring Tier-2 and Tier-3 cities too, where housing is comparatively affordable. This demand has led to developers incorporating plans such as gated communities that include projects with space for a home office and an array of amenities in Tier-2, Tier-3 and many cities that have shown this demand.

3)   Property search

Unlike traditional methods, the Gen Z opt to go digital while searching and investing in properties. Gen Z typically rely on digital media for their home searching and buying activities. They depend on online research, virtual tours, social media for reviews etc.

4)   Sustainable projects with smart tech

Most reports have suggested that Gen Z is very vocal about environmental issues and sustainability. Projects with energy-efficient lighting, solar panels, and sustainable building materials are a hit among this group. Also, automation is a given even in the most basic house of a Gen Z. Being dependent on tech, they prefer properties with tech such as smart security systems, thermostats etc. present. Additionally, large green spaces made available for urban farming, gardening etc. is something that is being avidly watched out for by Gen Z.

Gen Zers behaviour pattern on renting property

According to CBRE’s survey Voices from India: How will people live, work and shop in the future? Indians display more flexibility towards moving or relocating than their global counterparts. The CBRE survey mentioned that Gen Z led the preference towards moving to a new home in the next two years, compared to only 29% of baby boomers. This indicates that the younger generation will primarily drive upcoming housing demand.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, “While a majority of the respondents intend to purchase a house, we should not discount the remaining cohort looking for rental accommodation – 40% of Gen Z would prefer to rent rather than purchase. While 20% of Gen Z would prefer private rental accommodation, 17% look at student housing and shared accommodation as an option. Since this is the age group that will drive rental accommodation, developers must outline strategies to understand and tap demand well in time.”

“Further, families are now laying equal emphasis on a property’s quality and surroundings as on the unit itself. Therefore, attractive and thoughtful interior designs, well-planned outdoor areas and surroundings must now be complemented with remote working infrastructure.”

Housing.com POV

The Gen Zers segment are very clear on their expectations when they buy, rent a property. With them driving housing demand, the developers understand their requirements and accordingly service this market which going forward will become one of their biggest segments to cater. This trend has already started off with developers building projects that have multi-functional spaces and are energy efficient and sustainable.

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