Millennials Vs Gen X: Who’s Using Their PF To Enter The Housing Market?

While both of them are investing their Provident Fund (PF) corpus into property, their reasons behind it, their planning of finances, and risk level are significantly different.

The Employees’ Provident Fund Organisation (EPFO) permits withdrawal of PF savings for housing purposes, whether for purchasing a plot, building a house, or repaying a home loan.

Source : Freepik

By Jitendra Goyal

With the real estate scene changing in India, two generations, such as Millennials, born between 1981–1996, and Generation X, born between 1965 and 1980, are in the limelight as far as property buying is concerned. While both of them are investing their Provident Fund (PF) corpus into property, their reasons behind it, their planning of finances, and risk level are significantly different.

Generational Divide in Housing Choice

Millennials, commonly known as digital natives, are defined by their need for convenience, flexibility, and lifestyle-driven decision-making. They are influenced in their homeownership by urban movement, delayed marriages, and double-income families. In contrast to Gen X, who generally bought homes for security and family requirements, Millennials frequently consider property both a functional holding and an investment tool.

Generation X, now in their 40s and 50s, is relatively more established in their careers and has seen significant appreciation in their PF. For them, using PF to buy a home is about upgrading, investing in a second property, or moving into a retirement-ready house. Their purchase decisions tend to be more conservative and long-term.

Provident Fund Withdrawals: A Growing Trend

The Employees’ Provident Fund Organisation (EPFO) permits withdrawal of PF savings for housing purposes, whether for purchasing a plot, building a house, or repaying a home loan. This facility becomes accessible after five years of continuous service, making both Millennials and Gen X eligible at different stages of life and financial maturity.

Recent EPFO figures indicate a consistent rise in PF withdrawals for housing. Millennials, who are in their late 20s to early 40s now, are one of the biggest contributors to the workforce and have started availing of this benefit. With increasing desires for home ownership and with limited budgets due to high real estate costs, most are utilising PF money to arrange for down payments or lower their home loan burden.

On the other hand, Gen X has accumulated higher PF balances due to their longer work tenure. They often use this advantage to invest in bigger homes or properties in Tier 2 and Tier 3 cities, especially as remote work and hybrid models allow migration away from metro cities.

Why Millennials Are Tapping PF More Aggressively

There are a few explanations why Millennials are more likely to tap their PF savings:

Affordability Pressure: Increasing real estate prices, combined with low salary increases, make it hard for young purchasers to organize the first down payment. PF withdrawals offer a low-cost and affordable source of funds.

Early Homeownership Targets: As opposed to previous generations that targeted home purchase after the age of 40, Millennials want to be homeowners in their early 30s, driven by the demands of stability and independence.

Government Incentivisation: Initiatives like Pradhan Mantri Awas Yojana (PMAY) have encouraged first-time homeowners, prompting Millennials to jump.

With housing costs increasing and inflation squeezing home budgets, PF will continue to be useful to most prospective homeowners. Millennials will probably continue to fuel this trend, preceded by Gen Z as they enter into the workforce.

However, financial advisors recommend avoiding over-reliance on PF withdrawals, highlighting the importance of balancing future security and immediate needs. By proper planning, both Millennials and Gen X can use their PF effectively to achieve homeownership without jeopardizing their retirement plans.

While both Gen X and Millennials are utilising their PF towards the purchase of homes, the reasons and financial situations vary. Millennials lead in terms of volume and urgency, often driven by affordability and aspirations. Gen X, on the other hand, uses PF with caution, aligning withdrawals with long-term financial strategies. As the real estate landscape evolves, the trend of PF-fueled home purchases is set to rise, making intergenerational financial behaviour a key area to watch.

 (The author is DIRECTOR- Channel Saless Trisol Red Group of Companies)

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