Home Loan Is Urbanites’ Preferred Choice For Apartment Buying

Overall, 37 per cent of respondents are upgrading to a better home reflecting a growing shift towards mid-range and luxury housing which was traditionally concentrated in select cities but is now expanding to Tier 1 cities in India -- Raoul Kapoor, Co-CEO, Andromeda Sales & Distribution

Mumbai: A recent survey of 1,629 Indian urban homebuyers has revealed that 52 per cent prefer apartments, followed by studio apartments at 19 per cent, and independent houses or villas at 17 per cent.

Notably, gated communities and plots of land are less popular, chosen by only 7 per cent and 5 per cent of respondents, respectively. In terms of financing, about 79 per cent of respondents indicated home loans as their preferred mode for purchasing a home, as per Knight Frank report – Banking on Bricks.

Talking to Bizz Buzz, Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution says, “Real estate typically requires a substantial investment, and most buyers aim for the best property they can afford, often needing additional financing. Home loans are a popular funding option, largely due to their lower interest rates compared to other retail loans and their extended repayment period, which can stretch up to 30 years.”

This long tenure makes it manageable for borrowers to repay over time, he said.

Home loans also offer tax benefits on both principal and interest payments, and most lenders do not charge prepayment penalties if borrowers choose to repay early. These advantages make home loans a preferred choice for property buyers, he said.

Additionally, for banks, home loans are secured by real estate assets, making them a reliable lending option.

Overall, 80 per cent of respondents expressed a preference for owning a home with only 19 per cent opting for renting and a mere 1 per cent remaining uncertain. This sentiment is consistent across generations: 79 per cent of Baby Boomers, 80 per cent of Gen X, and 82 per cent of Millennials favour homeownership, while Gen Z shows a notable difference, with only 71 per cent preferring to own, and a high 27 per cent leaning towards renting.

The reasons for purchasing a home show distinct generational difference. Millennials (39 per cent) and Gen Z (36 per cent) are leading the trend of upgrading and purchasing for end-use, while Baby Boomers display a stronger interest in investments (29 per cent) and retirement plans (15 per cent).

Overall, 37 per cent of respondents are upgrading to a better home reflecting a growing shift towards mid-range and luxury housing which was traditionally concentrated in select cities but is now expanding to Tier 1 cities in India. The remaining 32 per cent are first-time homebuyers for end-use, 25 per cent are investing, and 7 per cent cite other reasons, such as retirement or acquiring a second home or vacation home.

Shishir Baijal, Chairman & Managing Director, Knight Frank India, said “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."

Location stands out as a priority and is the determining factor for 50 per cent of respondents, affirming its timeless importance in real estate. However, the near-equal emphasis is also provided on the property size and layout (45 per cent), price and affordability (45 per cent), which suggests that homebuyers are equally focused on securing value for their money while looking for spaces that meet their lifestyle needs.

Interestingly, the builder’s reputation (35 per cent) and proximity to workplace (33 per cent) play an important role, reflecting a strong demand for reliability and convenience, key factors that enhance buyer confidence in their long-term investment. Moreover, with amenities (32 per cent) becoming more significant, buyers are not just purchasing homes, but are opting for enhanced living experiences, seeking integrated facilities like gyms, parks, or co-working spaces. On the financial front, financing options (29 per cent) and future resale value (22 per cent) highlights that affordability and long-term investment potential remain crucial factors in the decision process, particularly as more buyers gravitate towards high-end homes.

Home loans is cited as the most preferred mode of financing across all income groups, with 79 per cent of respondents relying on this option. However, there is a noticeable variation in how affluent homebuyers approach funding. While 83 per cent of households earning between Rs1mn to Rs5mn prefer home loans, affluent buyers with household incomes above Rs5mn show a higher inclination (19 per cent) to utilise their personal savings or liquidate investments for home purchases compared to 11 per cent in the less than Rs5 mn household income group. This suggests that wealthier individuals take a more flexible, diversified approach to financing, blending traditional home loans with personal resources to secure property.

In addition to financing, the survey sheds light on homebuyers’ expectations from banks and financial institutions during the homebuying process. The top priority for 74 per cent of respondents is competitive interest rates, followed by flexible loan tenures (48 per cent) and a quick loan approval process (38 per cent). Guidance on legal and documentation aspects is also important for 25 per cent respondents, and 15 per cent of them value home insurance options.