Owners, Renters and Buyers: What happened over time? (Part-2)


This is the second in a series of data tales that looks into the India Human Development Survey (IHDS) panel dataset (2005-06 and 2011-12) to portray certain trends on the nature and profile of house ownership, renting and purchase in urban India. This part looks into the variation in the ownership of new houses based on size of houses and size of the households, to get an idea about which segment of the housing market has become more preferable than others over time.

The previous post in this series provided an overall view of households transitioning between rental and owned housing between 2005-06 and 2011-12. In this post, we look into the variation in the ownership of new houses based on size of houses and size of the households.

The share of homebuyers who transitioned from rental to their own houses is highest in the case of those living in two or fewer rooms, which indicates that there is a significant market for smaller houses: about 57.6% of the new homebuyers reported owning such houses in 2011-12. While about 90.4% of these households used to stay in similar sized rental housing earlier, there is also a significant share of households which rented smaller houses and have shifted to larger sized owned housing, as shown in the chart below, indicating a larger aspirational housing market in Indian cities.

Household Size and Nature of Homebuying

The larger market for small houses is contingent to the larger share of small households transitioning from renting to ownership, which means that an increase in the size of household seems to reduce the chances of buying a house. The share of households moving from rental to ownership is highest in the case of single or two-member households in 2005-06. This difference exists across all city sizes but is starker within the six largest metropolitan cities, as visible in the chart below. Smaller households in metro urban areas are more likely to purchase houses in comparison to the other cities, while the difference across the larger households is lower.

Additionally, single-member households mostly seem to have bought houses if they stayed single over time: only 36% of these who bought houses experienced an addition of family members. This is different in case of households with two members, where more than half of these saw an increase in the household size while moving from renting to ownership. The graph below shows that for larger sized households, buying a house is not contingent on an increase in household size: about one-fourth of the large households bought homes despite a reduction in family size, and about 68% of households with 3-4 members and 72% with five or more members bought houses while their family size stayed the same over time.

Overall, the housing market in Indian cities has a larger catchment of smaller families and houses, while larger families may have specific demands of their own. The next post in this series will discuss some parameters of the profiles of home buyers in Indian cities.

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Shamindra Nath Roy

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