Accommodation can be classified into three categories—owned houses, rented houses and houses typically provided by employers. While home ownership is one of the main aims of household savings, almost one-third of Indian urban households live in rented accommodations. Not owning a house because of financial reasons is just one of the reasons for living in rented accommodation. People could also do so because of work, proximity to facilities such as education, hospitals, etc.

Deepak Narangs wife looking at a multi story bulding in Noida. These are newly built residential properties,offers most of the facilities like club, park and small shopping arcade. Ramesh Pathania/Mint

The richest SEC A segment, that has the highest share of households earning—more than 10 lakh a year—finds it the easiest to purchase homes. At the other end of the spectrum, the poorest SEC E households, with the highest share earning less than 3 lakh a year, have less than 60% living in their own homes. While this trend works across the country, northern states have a slightly higher share of households living in their own homes.

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In SEC D and SEC E segments, more than 60% of the households live in their own homes in the northern states. This could reflect in part the lower home values in towns of the north. It could also reflect the trend of people migrating from these states to other regions, who may choose to live in rented accommodation.

Looking at the share of households in owned accommodation, Delhi, Pune, Coimbatore, Madurai, Ludhiana, Chennai, Hyderabad, Bangalore, Mumbai and Kolkata rank at the bottom in the SEC E segment. Even in the SEC A segment, there are many who live in rented accommodation because of work reasons—cities such as Hyderabad, Bangalore, Chennai and Kolkata have less than 60% living in their own homes in this segment.

Also Read | Previous articles in the Indicus Indian Consumer Spectrum Series

Once again, finer segmentation of urban consumers gives more insights. The highest share of households living in their own homes—more than 80%—are found in two segments, both whose chief wage earners are in their mature years. In the affluent category, this is the richest segment in urban India—households whose chief wage earners are well educated, businessmen, executives or professionals, married and living in joint families with their grown up married children.

Next to these households, from the less affluent category, comes the fifth largest consumer segment in urban India comprising households whose chief wage earners are school educated businessmen or skilled workers, married with grown-up, married children. It is by this stage in life that the chief wage earners are settled in one location and have saved enough to live in their own homes.

The segment with the highest share of households living in quarters that are neither owned nor rented has chief wage earners with the lowest education and skill sets, single and living alone in the cities. This group is the tenth largest in size in urban India and comprises mostly those with regular salaried jobs, accommodation seems to be one of the benefits given by employers.

The segment which has the highest share of households living in rented accommodation—more than 75%—comprises those whose chief wage earners are young, single, graduate professionals or skilled workers. Clearly, the single status is the dominant characteristic influencing the decision to live in rented houses, even as they put money aside for owning a home once the chief wage earner is more settled. In fact, those households who are living in joint families are more likely to be living in owned homes, than nuclear families.

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