Mostly, properties are the largest asset of Indian families. This is also considered to be one of the most effective ways that helps you build properties. These days, however, you will come across several case studies that will tell you how difficult home ownership has become. A most recent survey of the Consumer Finances Data conducted in 2022 says that the median as well as the average wealth gaps between the renters and the home owners have reached a historic high since the first time this data was collected in the year 1989. This means that in the last 33 years the median wealth gap between these two sections has increased by around 70% and the average wealth gap increased by around 250%. There are several new residential projects in gurgaon coming up, however, most people are not able to afford it due to low income.

There was a shortage in the supply, as a result of which the prices of the properties went up. This resulted in a higher costing burden for the renters. The renters therefore were left with limited savings after paying the house rent. The renters have also not benefited from the strong financial market in the last few years and this further fuelled the gap. It is therefore important to boost the housing supply to ensure that the financial and the housing wealth gaps between owners and the renters do not go up further.

Housing Wealth Gap drives the overall Wealth Gap between Owners and Renters

The Housing Wealth Gap accounts for the highest portion of disparities in wealth. This portion has increased to a great extent in the last 10 years. There has been an increase of the median housing wealth gap that significantly decreased when the prices of home went down. The supply however, substantially fell short of demand during the recession. As a result the prices of the homes have increased that has led to a huge gain in the home equities for people who were able to access homeownership during the last 10 years.

The homeowners did gain a significant amount of wealth but renters found it challenging to access homeownership as affordable housing almost seemed to disappear from the market. Over the past decade, rental prices have increased more than incomes as a result of which the residual income of renters have increased to a great extent.

In the year 2022, it was found that a large part of renters were spending more than 30% of their income on paying rent. This was a record high and proved that more than half of the renters were rent burdened. This is reflected in the media housing cost to income ratio and this also increased during the pandemic.

Median Housing Cost to Income Ratio increased for renters and decreased for Homeowners

This means that the homeowners are able to save more money after they pay the housing costs in comparison to the renters. Since the renters have less savings, therefore, it has led to differences in the financial wealth and this difference increased at the time of pandemic. 

More Housing Supply is needed to mitigate the growing Wealth Supply

If there is no increase in the housing supply, the wealth disparities between renters and homeowners will continue to increase and there are chances that the renters will persist. To increase affordable housing, it is essential for more states to end the state wide single family zoning. The cities can also eliminate the single family zoning districts while legalizing the infill housing.

Conclusion

Though increasing the supply of the houses is the solution to the problem, however, it will take time. Therefore, during the interim period government can reduce the rental cost burdens of the renter who have low income by expanding the housing choice vouchers. This will increase the savings for financial investments and down payments. Moreover, this might also provide targeted down payment assistance to the home buyers of the first generation who lack generational wealth. Buying homes online in Gurgaon is also a convenient option that will allow people from other cities to invest in the city.