55% of Software professionals in India, dont own a house [Survey Results]
POSTED BY ON May 18, 2016 COMMENTS (51)
Today I am going to share with you some data related to software engineers and their home ownership pattern. But before you move ahead, I want to share with you that approx 55% of the software engineers who took our survey did not own a house.
Survey with 10,917 participants
Recently I ran a very large survey which was taken by around 10,917 participants. Out of those 4,940 people were from the IT Industry. I had asked many questions related to real estate ownership like how big houses they own If its bought with a home loan or not and if they don’t have a house, what kind of rents are they paying apart from many other questions.
As a big portion of this blog visitors is software professionals, hence I thought let’s do an article only for software professionals in India as of now. I will publish a detailed report later on the overall data, but as of now, you can look at 3 big and important information.
Majority of software professionals in India bought house with home loan
I know this is not a finding. Almost everyone buys a house on loan only because very few people can pay the full amount on their own and this gets confirmed by this survey. Around 81% IT professionals said that they took home loan for buying the house, however 10% people got the house in inheritance and only 9% people paid the full money out of their pocket, which I think is a good number.
90% of the house owners (IT professionals only) own either 1 house or maximum two house. Only 10% house-owners have more than 2 properties.
Out of 100 software engineers who dont own a house, 36 work in Bangalore
If we look at the top 6 cities which are into software jobs creation, we found out that the higher the cities reputation into IT Industry, higher is the number of non-home owners % wise.
I mean out of 4940 software engineers, 1533 work in Bangalore and out of those 886 said that they dont own a house, which is 36% of the total IT population which took the survey. So 36% of software engineers who dont own a house, live in Bangalore, compared to only 10% in Mumbai or 11% in Chennai. Here is the full data
Who is responsible for the high real estate prices in big cities?
In this article, I want to understand what you all think about high real estate prices? What is the reason behind it? Can we say that to some extent (if not fully), the IT professionals contribute to the real estate prices increase?
I know not all software professional earn very high salaries, but in all the big cities, there is a section of IT class which earns a very handsome salary and they suddenly use it to take home loan and buy a house either for consumption or for investment purpose.
This is true for many other Industries as well, but do you think IT sector contributes much more than other industries? I do not want to make any judgment here, but I want to hear from IT professionals who read this blog about what they think about this?
Some people told me that we can’t blame software professionals for high prices in real estate, which I agree. No one can blame anyone, but I wanted to know what thousands of people from IT background and non-IT background think? What is the perception?
So I separated non-IT and IT people from the survey and I asked them the same question and looks like people from IT industry are of stronger opinion that real estate prices are high because of IT industry. While 39% people from non-IT background said clear “NO”, only 28% people from IT background denied that IT industry has contributed to rise in property prices. Below are the results of survey by around 10,917 participants out of which 45% are IT professionals themselves.
What people have to say about this?
Let’s hear some people who have shared their views about this topic and how they feel that IT industry is somewhat responsible for high real estate prices.
Snapshots taken from Asan Ideas of Wealth Facebook group
But 55% of Software professionals still don’t own a home
At the same time, we have a big number of software professionals who cannot afford a house because they don’t belong to that very high earning class. Software industry like every other Industry has its own issues. A big percentage does not earn very high salaries and that is confirmed by the survey also.
Salaries in IT industry is highly skewed
Only 12% of IT professionals who were surveyed, are earning more than 20 lacs per annum where as 57% of the participants are earning below 10 lacs. Now that’s just 80,000 per month and I am sure, if one is living in a city like Bangalore, Pune or Hyderabad, it will not be considered as a very high income because given the expenses these days, people at that salaries would hardly be saving anything significant.
As per a website payscale, which has an extensive database of various jobs related information like the skills needed, salaries etc. The average Salary of an experienced Software Engineer in India is close to 13 lacs (with experience of more than 10 yrs) . Note that this is an average number
Hence, while there are many IT engineers who earn big amount (many a times double income family), and who can afford to buy a house easily. At the same thing, there are many software engineers who do not earn a big amount and are struggling to manage their expenses. Here is one perspective
I analyzed the results of 10,917 people who took the survey and found out that if you look at the percentage home ownership industry wise, then software industry is not at all at the top. Infact, it’s quite below average. But then we are talking of only big cities (top 10 cities of India). On top of it, IT Industry has somewhat slowed down in last 5 yrs and its not at its peak now. You can read this long thread on IndianRealEstateForum where people discuss about the impact of IT slowdown on the real estate market.
So basically we are trying to see that out of 100 people who belong to XYZ Domain, what percentage of them owns a house. Domain here means Software, Medical, Govt Job, Business, Marketing, Sales, Engineering * Finance. There are many other domains, but we are not considering them, because there was not enough data. For each of the above domains, we had at least 200 data points each and at times more than 500 or 1000. Here are the results.
I had kept Retired also as one of the categories, because that would be a big number. So we found that the those who are retired have the highest home ownership which is kind of obvious, but after that business class has the highest home ownership ratio of 52% , followed by Manufacturing and Medical, but they are not having very big margin.
IT Industry ownership stands at 45% and we can be kind of very assured of that because that comes form 4940 people data, which is quite huge.
Also, note that the lowest home ownership is among Sales and Marketing Professionals & Even Pharma, I don’t have much interpretation for that, but may be it’s because they might have a big variable component in their salary and that might be a deterrent in their home buying. If you have insight on this, please put them in comments section.
Question for you ?
We want to know from you, what is your views on increasing real estate prices in most of the Indian cities and do you see IT industry contribution to it? Please share what you think in comments section.
HI Manish,
There are lot of folks who work in IT and don’t even dare to purchase a house in city like Bangalore where i live. However your survey would have given more explicit data if you would have included the age of a person or the # of years of experience in IT and the level who could have afforded to buy a house.
I didnt take the age data exactly !
Great stuff!
Thanks for your comment Mudit
House is never a asset if you analyze the financial pattern perfectly. House will always stay in liability until unless you get a bank loan at 0% interest with long term. One should not concentrate on buying a house until unless they have surplus in their balance sheet. THIS IS MY OPINION with basics of FINANCIAL LITERACY
Thanks for your comment Sushant
Dear Manish,
I see many people are commenting on the sample size. You may like to use the sample size calculator and place it in the article so that people understand that the survey results are representative of a large population. https://www.surveymonkey.com/mp/sample-size-calculator/
Please let me know if this was useful.
Thanks for sharing that, It was very useful 🙂 . I can see that my survey size if pretty good enough!
Thanks Pankaj
Well the headline is very catchy but not useful. It’s just close to 2500 people who did survey… and out of which 55% does not have. So I agree with other user to change the heading to show real thing
The company in which I work, just from Pune location I would be having more than 2500 people who bought the home, so this survey result does not look correct at all.
Thanks for your comment Reader
Hi Manish,
Always admired your blog, and here are my 2 cents:
I’ve observed RE for 8 years (and I work in IT!), since the time I bought 3 BHK house.
We think free market economy will force RE to revert to normal, but 2 primary reasons for RE prices to remain high: (i) Seller’s market: buyer does not know how to approach the seller, and negotiate; and they do negotiate, you just have to know how
(ii) Industry lobby CREDAI is very powerful and has lot of ongoing interaction with baboos. You know what that means 🙂
(iii) Baboos always postpone disrupting RE status quo (regulations, governance, you fill the fancy word), because they have vested interest + economy will be significantly impacted – lot of unintended consequences will be there eg: banking deposit equilibrium will be disturbed.
In general, for your blog, I heard high praises, and the same for your services. So keep it up! I particularly like your humility in handling idiotic blog comments.
One suggestion: please customize your comments for blog comments instead of standard cut&paste; will make the comments section much better!
Thanks for your comment Bharani
As stated in one of the posts .. IT was responsible only in the beginning may be till 2011 .
Now normal IT people also cannot afford to buy the house.
If you analyse the property sites like 99 acres etc. you will see most properties under construction are available for resale.. mostly by brokers and individual ppl , who has bought it during pre-launch and charge exorbitant rates at the time of completion .
Mostly IT families with double income no kids could afford 70L+ assets .
Please note : Salary of 13L pa is only on paper (CTC) . After all deductions and looting by govt …god knows wats left 😛
Some facts :
Manufacturing sector : what you get is wat you save . food , vehicle , stay , most expenses are paid by the company .
Business : Tax comes only after all expenses .. no TDS .. and they are smart (or have smart CAs)
Banking – Bank employees get Loans under simple interest . (30 L 20 yr loan , EMI is low as 11k or even less) which is less than the rent paid 20k.
My observation is in line with the survey results …
And dont blame the poor 95% of IT ppl for each and every rise in price…
Thanks for your comment sam
Thanks for your comment sam
Hi I do agree that IT sector contribute more towards real estate business either directly or indirectly.
As per your survey, In It sector less people own houses, which is a direct impact.
IT people ready to live in high class locality with swimming pool and GYM and ready to afford a considerable amount of salary. This is indirect impact. So property owners dependent on It sector for rental income.
One more reason is in It sector entry level salary is high or market standard is high compared to other industry like manufacturing. So a person getting Rs.6000/Month ~ Rs.200/day in manufacturing and in IT it is around 18000/month and 600/day . So value for money is less known in It sector.
Grandfather knows the value of Rs.10 Father knows the value of Rs.100 and current generation will know the value of Rs.1000 not less than that.
So there is a direct and indirect impact on real estate by IT.
Hi Sivasakthivel
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Hi Manish,
It is nice article with some foolproof data. Coming to the segment who caused the higher prices of real estate is the Indian Mentality. People who own properties and houses can show some tangible assets when they have to identified in society. Other people who are viewing them can not see their debt from Banks or private firms, But what they see is the physical existence of assets. Equity investment is not been considered as good asset class even now by common people who increased their financial standard with either professional education like Lawyer/Doctors/IT professionals/ Management Executives. Even if you ask Management Executives from reputed institute like IIMs, 80% of people vote to buy a Home on loan. It is bcz of thinking paradigm. In “Rich Dad Poor Dad” book, Author clearly explained that parents guide them to enter into Rat Race and pledge the life to Banks.
Good one. I agree.
Hi AnandhaPudota
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Hi Manish
Good efforts but still this survey size is still not large enough to make any trend Especially when every year you 50-60K people are joining IT industry and now with multiple sector people are earning good whether ti is Finance or Medical or Management or Manufacturing. Also many IT professionals are having home other than city in which they work but mention that they don’t have house. Also only IT people can not drive Realty growth but yes a strong contributor but so as Medical , Finance and Other Professional people too. One more reason for high prices is Builder Lobby -Politician lobby to just quote high prices. If we see from Past 6 years, Rates are are not increasing the way it was in 2010-2011-2012. Greed has reached at top and forcing Builder to increase price with cautious ,which in turn forcing investor to stay away from Investment in Property.Even though Common Buyer Capacity is same.
YEs, I agree .. but for a survey few thousands of info is good enough to get an estimate . And note that this is only for the net savvy people .
Hello Manish,
Nice Survey. I am an IT professional. and I earn something enough to have a home loan. But I have not taken any . Seeing the scenario right now, I find it useless to have a home loan and pay it forever . You just have an illusion of your house but it still belongs to the bank. I will only take a property when I will be able to pay atleast half in cash or the rates are substatntially low.I mean paying 50 lakhs for 1 BHK is insane.
Thanks for sharing your views on this Saket !
Hello Manish,
I just wanted to highlight that one of the probable reason why manufacturing people own high % of house :
Mostly all manufacturing companies are located outside cities like in pune its chakan, in delhi ncr its manesar, in gujrat its sanand , in chennai its sriperumbudur… So manufacturing people are buying somewhere near to their work area hence they could afford houses.
Thanks for sharing that Jijo
Statistics is tricky. I would have named the article “55% of S/W professionals, who responded to my survey, donot own a house”.
Many reasons can be cited.
1. Stagnated S/W professional’s pay
2. Still high real estate prices
3. Survey may not be from a true cross section(It addresses itself to net savvy professionals who are working on their personal finance.
4. Changing mindset of a cross section
etc.
Its always like that 🙂 . A survey result is only as per the data collected. The higher the number of survey participant, the higher the chances of conclusion be correct .
I am not a IT professional, but I do believe that a part of high real estate prices are contributed by the software engineers. They have a lot of money at disposal (the ones who have been in the industry for sometime anyway do). A lot of money goes to the Tier 2-3 cities through those who are posted on site somewhere outside India. To say it is all from IT would be wrong but in Bangalore and Hyderabad the cross-section is predominantly IT.
On the other hand it is probably better if a lot of the IT professionals ( actually anyone)who would change cities or be posted somewhere else do not buy a house unless they believe they can flip it or maintain it from afar. I know people on both ends one who have never bothered with their house once they moved out of the city and others who have taken family or professional help to maintain a steady check and flow of income from the same.
In a different spirit do you believe buying is a good decision?
Age old wisdom handed down from generations to generations favored owning land or own house / plot / flat you get the idea vs what is being taught by self proclaimed financial gurus that renting is better than buying . I always after buying a flat started to regret my decision but then Your question ” Do you believe buying is a good decision ? ” prompted me to look for answers in numbers and numbers don’t lie . I came across this site http://www.bigdecisions.com/housing/rent-versus-buy-calculator and also this one http://www.livemint.com/Object/ipfQL8zoXnj5AmuZCEJGsL/rentvsbuy.html . For me the values came out to be 11 and 12 . I guess this answers pretty well . Buying is for me ..
Thanks for sharing that Joel
My personal view is that if one has the capacity to buy , one should buy because we cant just look at a decision from return point of view. Its a emotional decision
I agree, that is what led us to buy in the first place. Now we are looking for tenants and it has been difficult to do that from a distance. Right now we are considering whether we should buy another one in the current city we are in.
EMI’s for what we can afford will be higher than the rent we pay but emotionally we believe we might be building something. That being said commuting in horrible traffic and spending over 3 hours on road each day is scary. Plus we are not really sure how successful we would be if we want to sell either one of these.
The Big Decision says I need to live in the property for 8 years to get any profit from it at all which we know for sure is not the time we will be in the city for. Like I said still thinking about it.
On the emotional side of things we just equated our 10 year loan in 3 years and I don’t want to get another emi rolling.
hmm.. I personally think that one should do minimum required in the area of real estate and then save in mutual funds and other product to have high liquidity !
My views exactly… 😀
The biggest reason is banks lobby just like hospitals tuned in to business center only after rise of health insurance !!
Thanks for your comment dhadiga
I filled your survey. Your survey is fundamentally flawed because in your survey you have only collected the data whether the people have home or villas. But you conveniently forgot that people can buy residential sites too! Among the 55% there is a high possibility that they own a site already and your survey failed to collect this data. If you are about to say that it is deliberate that you only focused on home buyers then please do not sensationalize saying 55% of software professionals do not have homes BECAUSE they may be having sites which is a common practice so your survey doesn’t the reflect the actual real estate trend. People who typically have homes they don’t buy sites and people who have sites, most may not buy homes again.
It didnt occor to me . I wanted to check how many people have structure to live in ! . I wonder how many people out of 100 would have land/sites, who dont own a house ? I guess is not more than 3-4
Manish
Excellent analysis, Manish. Your survey and analysis has correctly depicted the IT and Real estate markets. As others have mentioned here, the IT industry is moving towards saturation, developed countries have become wary of job losses to outsourcing, and they are trying to get those jobs back. Some of them have opened their own product wings in India, and their employees earn significantly high. But most of the service industry is still on pre 2007 salary structure. Freshers only get 3 LPA, which is what I got when I started 10 years ago !
But the real estate market has not adjusted prices. Even banks approach IT employees differently, employees of some companies are more favoured, get better rates for loans, and charges waived. But by and large, IT is seen as unstable for loans. Even the people buying homes do that only for investment and save tax, they really start thinking of buying homes only when they reach the > 10 LPA bracket, when they start losing 30% tax. Until then, most people stay away, or are unable to buy homes
Hi Ranjith
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
In general IT salaries are not very high across the board. It’s not the 2000 boom anymore, the industry as a whole has settled down and looking to cut cost wherever they can. Only a small percentage of people earn the megabucks and that is always highlighted by the media. But the majority cannot expect anything more than 5-10 LPA at best. Starting salaries are still as low as 3 LPA and that hasn’t changed much over the years.
So, it comes as no surprise that IT people are unable to buy homes. Those who do buy, take home loans and remain in debt for the next 20 years unless they manage to go abroad which is always seen as the key to making good money. But the industry as a whole has become so saturated that, everyone is only getting a very small piece of the pie which is simply not good enough.
Hi Anjan
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
I guess black money is one of the major reason for real estate prices. If a person buys a property for 1crore rupees, he will be giving 80lac black money(or even more) and 20lac white money. Now the seller who receives such a huge amount as black money have to invest/hide the money somewhere. Since there are a very few options available to invest black money in India, he will be forced to invest in another property. So it will go like a chain reaction.
Thanks for sharing your views
Part of what you said is true. There are lot of other options available (eg: gold), but the way black money works is what you see every day: for any transaction, you deal with cash! I am not talking about 5/10 Rs, it includes 1000s/10000s.
But RE is also a major part of it.
In one of the cities I know, a group of politicians owns half the RE! Everything else they deal in cash!
Hi Manish,
Very in depth analysis. Great work.
Regarding real estate price hike.. i would like to make one simple point if it is all or at some extent due to IT professionals thn what about tier2 or tier 3 cities.. you can see these cities are also having same issue real estate price are higher.
IT was at one point of time a race horse , now its even slower than a mule . The guys in IT having really good salaries if am optimistic may be 15 % of the workforce . Today other sectors are paying much better with less tedious and mental strenuous work . When the national bank was recruiting for Bank PO it started with 8L pa CTC. This is just an example there are many more I can give . Today almost all sectors are paying higher than IT but still in the media this frenzy or obsession with IT that its high paying does not seem to die . Just to bring things into perspective today what a class 1 or class 2 govt servant draws as pension is more than what a young guy in IT takes home as pay .
Thanks for your comment Rd