Millennials are rewriting the rules of the housing market
words Yolisa Mkele
Remember not so long ago when millennials were ruining the world? More importantly, when they were wrecking the traditional idea of real estate? No matter where you looked there were stories about how the generation that followed Gen X was becoming less interested in buying houses, more comfortable with renting for life and had essentially been priced out of the housing market in a lot of major cities around the world. Well, it turns out that those reports may be a little overstated because, according to a study by real estate giant Sotheby’s International Real Estate, some millennials are balling out of control.
As it turns out, the thing that separates millennials from their predecessors is not so much the desire to buy a house but rather, how long they are willing to wait to buy the mansion of their dreams.
Speaking to Bloomberg.com, Sotheby’s chief marketing officer, Bradley Nelson said: “In the past, people bought a modest property, lived in it until starting a family, and then traded up to a larger property. Millennials are finally coming out of the gate, and it’s not uncommon for the first purchase as a first-time homebuyer to be a multimillion-dollar luxury home in the US or internationally.”
The result of all of this is that millennials are fast becoming the driving force in the luxury housing market.
Locally, according to Statistics SA, millennials make up the largest slice of the generational workforce at 51% and comprise roughly 30% of SA’s population. That makes them kind of a big deal when it comes to economic clout in this country. According to Businesstech.co.za, more than 300,000 millennials purchased property between 2015-2017 and the fact that interest rates are at an all-time low is also driving a change in the local real estate market.
“This trend is driving many renters to become property owners. This is evident in the average age of home loan applicants for Q3 of 2020. On average, buyers are one-year younger from 38 to 37 years of age, while the age of first-time buyers has dropped from 35 to 34 years compared to Q3 2019,” said Rhys Dyer, CEO of home loan experts Ooba to Businesstech.co.za.
As with the overseas markets, our low interest rates and favourable lending conditions mean that millenial home buyers are starting off a little bigger than their parents and grandparents.
What all of this seems to show is that, sometimes it really isn’t always best to count your chickens before they hatch. Back when millennials were in their late teens and early 20s, the rest of the adult world was convinced that they were slackers who would always live in their parents’ basements and destroy the housing market. Now they’re the ones making it rain in real estate.
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