Millennials and House Ownership

Residential ownership is one of the main purposes of millennials families in Indonesia. The complete data about residential ownership can be accessed extensively in mass media. However, unfortunately, there still a lot of complaints from the young family about the difficulty of purchasing their first residential house which is caused by some factors. What actually hinders house ownership and how is the solution?

First is the price increase for inflation that will continue every year. The rising of house prices is very influenced by various factors like Tax Object Selling Value (NJOP), facilities and the available location, and the details of the house’s specs. The house prices keep increasing, while needs also higher, making millennial generation having difficulty being able to have a residence in the next 10-20 years.

Next is the demands of life that lead to consumerism. The need for showing existence becomes the choice of lifestyle which erodes the salary. So, the priority of salary allocation is more directed to purchase that is experiential rather than buys a permanent asset.

Lastly, millennials are living in the era of the rising sharing economy. Since 2011, Time Magazine listing “the sharing phenomenon” as one of the ideas that changing the human way of living. Currently, how many choices for ride-sharing like Grab or GoCar, vacation home-sharing like Airbnb, then the choice of renting children's toys, renting clothes, and of course renting a residence for a residence. This ease made the millennials change their mindset and began to abandon the concept of buying a home.

Whereas, property ownership is pretty important in household financial planning because it gives flexibility for the owner to inhabit and make it an investment asset. Property is also one of the assets that can be passed on to the next generation.

There are several considerations before buying a residential house.

The first thing that must be decided is to want to buy a residence in the form of a house or apartment. The different shapes and locations should follow lifestyle patterns in households. If the family likes practicality, the apartment options in the middle of the city are quite interesting.

The bank can help to provide an indicative valuation of the value of a property based on appraisal analysis. This is very important to determine the purchase price of the house and the legality of the property. Understand that there are prices according to NJOP (Tax Object Selling Value), and market prices. If the property has a certificate of ownership rights, the value will be higher than which is only expressive.

How about the financial ability for buying a house? The KPR option is often the people's choice given the price of houses that are not cheap. If you have to wait until you have enough funds to buy a house, it feels like it will take a long time to raise funds because the value of the house will continue to rise. To take a mortgage (KPR), you should pay attention to the following two things.

What price can you afford to buy? The indicator is you have funds of at least 20-30% of the purchase price of the house to be used as a down payment (DP). How much is the mortgage installment (KPR) that you can pay? The indicator is you have a cash flow of at least 25% of routine monthly income for at least the next 5 years that is not used for routine consumption needs.

I personally really recommend you to take home loans, when funds are not enough to buy cash. Discipline to set aside income to collect Down Payment will be very useful as an "exercise" we pay mortgage installments (KPR). One thing to note, avoid collecting DP with the help of unsecured loans. Because later your installments will double.

Compare the plus and minus mortgages with a fixed interest of all time with fixed rates of XX last year floating. While window shopping, prepare the legality of the required documents such as Salary Slip, Land Certificate (SHM / SHGB / Sarusun), IMB Certificate (Permit for Building Establishment), UN SPPT, Power of Attorney, Sell Certificate, Inheritance Letter, and others. The bank will give a decision about the eligibility of the property for the loan agreement process if all the necessary documents have been completed.

1. Determine the Shape of the House and the Location
2. Determine Market Prices
3. Determine Financial Ability
4. Collecting money to buy cash or Down Payment
5. KPR Windows Shopping

Live a Beautiful Life!

By: Prita Ghozie from ZAP Finance