Generation Y and the Property Market
Globally, the trend over recent years has been that millennials have a significant share in the home buyers stake.
According to Elize Botha, managing director of Old Mutual Unit Trusts, most millennials entered the workforce during and after the global recession of the late 2000s and early 2010s. Millennials are likely to pay more than three times more on their first home than the generation before them.
At PropertyFox, during the 2017/2018 period, 54% of our buyers were millennials.
As millennials enter the housing market in greater numbers, they’re approaching it in a much different way than previous generations of home buyers.
- Tech features heavily in millennials’ decision making when it comes to buying property. They are dedicated to their devices, and for this group, technology plays a central role in home buying. In addition to neighbourhood connectivity, digital connectivity is also becoming more relevant to property prices and sales. High-speed internet is as important as electricity and water to the millennial market.
- Millennials express specific preferences for homes. They want homes, but they don’t just want any home. They’re increasingly skipping the starter home and trading up to something bigger and more expensive.
Millennial home ownership comes with its difficulties, too.
They want homes, but they don’t just want any home..
“Millennials have had to navigate a tougher global economic environment than previous generations – one of high inflation and unemployment, social and political unrest, and low economic growth. All of this contributes to their ability to purchase a house, but not all is lost,” says Botha.
With the above-mentioned in mind, here are a few tips for millennials that could help them during the home buying process.
- Start saving today for your future home. This is the most important advice. Even if you start by just saving R100 a week (that’s four coffees from your favourite shop). Opt for accounts with a good interest rate and build up to something long-term like unit trusts.
- Know when to buy. The recent recession has not been good news for sellers as economic downturns or tough periods tend to favour buyers. The best time to buy a house is during a buyers’ market. It is also wise to buy as soon as you can afford to.
- Budget for more than just your installment. Buying a house is not just about getting a bond. As a first-time homebuyer, you need to consider the other costs that come with buying a property. This includes transfer duties, bond origination fees, homeowners’ insurance, life insurance, household contents insurance, property repairs and maintenance.
Millennials have left a lasting impression on the housing market, and more evolutions may be on the way as the next generation of home buyers enters the fray. If 2019 is the year you want to own your first home, make sure to save, budget carefully, work on a good credit record and only buy when and if you are ready.