Consumers under the age of 30 years old or Millennials, as they are more commonly called, are standing up and making their presence known in the real estate market. While it is the Generation X consumers, aged between 31 and 45 years old, who are still the driving force behind the property market, there are several areas around the country where Millennials represent the highest percentage of recent buyers.
There are approximately 18.74 million Generation X consumers in South Africa. However, Millennials account for around 28.4 million of the population. This up-and-coming generation will have a massive impact on the economy and more specifically the property market going forward. As the future decision makers, Millennials will be able to change the real estate industry as we know it and will largely influence trends that we see unfold. To a large degree, we already see trends developing as more and more Millennials influence the dynamic of the real estate sector.
Here are a few buying and lifestyle habits of Millennials that will shape the economy and real estate industry:
Millennials would rather rent
There are numerous reasons why these younger generation consumers favour renting over buying. Given the increasing cost of living and challenging economic conditions in South Africa, many Millennials are choosing to stay in the rental market a while longer. There is also the desire to stay in trendier, often more expensive areas they that would not afford to buy in. Renting also offers them the freedom to pick up and go with relative ease. While Millennials want their space, many feel that they are not ready to manage a property and prefer to have a landlord take care of the maintenance issues.
While most value homeownership and want to invest in a property one day, rising debt and delayed life events will delay the process. When they do purchase a home, it is likely to be an entry-level home that they can rent out if they decide to move away.
Millennials are tech savvy
Millennials are heavily reliant on technology and are more likely to use online search portals to find a home they like than going through an agency. To stay relevant, real estate professionals will need to have a strong online presence to engage with the Millennial generation. Not only does this mean a website with high-quality images of homes, but also an engaging social media presence.
Compact, efficient spaces
A large number of Millennials are looking for a minimalist lifestyle which includes fewer possessions and smaller living spaces, as this provides them with both the flexibility and financial stability they want. Millennials don’t want to spend all their time at home but see their living quarters as more of a home base. As a result, they are comfortable in smaller, lock-up-and-go spaces. Many are also looking for homes with energy-efficient elements so that they can reduce both their monthly living expenses and carbon footprint.
To cater to the wants of Millennials the real estate industry will need to keep increasing its energy-saving home offering. Environmentally-friendly, multi-functional spaces are highly appealing to Millennial home buyers.
Millennials have already started to impact housing market trends and will grow in influence as their incomes increase and they begin to settle down. As this generation continues to effect change, the industry will need to take their needs into consideration and innovate accordingly.