Engel & Völkers Licence Partner Stellenbosch > Blog > Have Millennials really changed real estate culture?

Have Millennials really changed real estate culture?

Private Property • Kerry Dimmer • Jun 4, 2019.

Innumerable, and respected, sources have been attempting to pigeonhole Millennials since the term was coined in 1987. ‘Attempting’ because every year, the analysis changes because like every generation before them, the Millennial profile matures as they navigate through milestone life phases; be that leaving the education system and entering the workforce, or marrying and starting a family.

In 2019, Millennials are between the ages of 23 and 38, and in South Africa there are some 16 786 167 of them, according to Statistics SA, accounting for 28,64 percent of the total population.

Read more: Why Millennials are choosing to rent

This is what we know about them this year, according to various sources: they are not influenced by advertising; blogs are consulted before purchases are made; authenticity is more important than content; inheritance won’t influence their spending habits; it’s all about social media; they enjoy co-creation with developers of products and services; on average they own three smart device’s; they expect companies to give back; and, it is claimed, they buy cars and rent houses.

As business picks through those traits that are important to capturing as big a percentage of the Millennial market as they can, there is at least one commonality that is assured, and will not change with the cycles; that this is the first generation that is fully immersed in technology, and has been since birth.

There is no doubt that the real estate industry, like every other sector, has completely embraced the technological DNA of the generation, and will continue to nurse their needs through an ever-evolving number of smart apps and platforms. If however, as has been suggested by a variety of credible analysts, that Millennials are more experiential than the previous generation, also known as the Xennials, their search for a home is broader than the long-standing ‘location, location, location’ statement.

A snap survey I took among a random group of Millennials, from ages 24 to 34, proved this to be true. They all said it mattered not where they lived, but what they could tap into from their environment. Obviously technology, like wifi and speed of internet, must be available but not as an added cost factor as they have concerns about affordability.

With the exception of three couple’s – late 20s, early 30s - all my respondents still live at home either because they are paying off their student loans, or are trying to build up a home deposit fund. The idea of home ownership seems to be important only if there are children in the mix. Most are looking to work from home or from an environment where travel is involved, be that local, national or international, which brings us back to that ‘experiential’ thing.

The Millennials I chatted to aren’t really interested in the café culture, they want new experiences and don’t mind where they are to be had provided they can access them quickly, and preferably within walking distance of their front door. The same applies in how they get to work; they like to cycle, walk or take short public transport trips.

This is where a grey area blurs the lines because if Millennials aren’t affected by ‘location’, but want to remain close to employment and wage growth opportunities, and still have unique experiences, where are they looking to buy or rent? Richard Gray, CEO of Harcourts provides some clarity and confirms what the snap survey respondents said.

“CBDs and large metros, such as Sandton in Johannesburg, the City Bowl in Cape Town and areas able to accommodate the purchasing and rental behaviour of young professionals such as apartments and first-time buyer opportunities. But what is interesting to note is that we're finding increased interest in outlying areas that offer lifestyle advantages given their gravitation toward home-based offices and remote working conditions, and therefore only needing to access CBDs periodically. With this being said it showcases how varied the market really is in that bracket and there is no hard or fast rule.”

Gray also confirms that modern real estate, along with relative technology, showcases just how informed millennials are. “Their ability to gather information and assess circumstances is well advanced,” he says. “and while they may be participating in real estate investment when they are able to, it is not our job to usher them on whether to rent or buy a property. Rather we are there as professionals to assist them with satisfying their needs, and offer insight and advice into their unique circumstances and requirements.”

That said, and according to Lightstone property some 330 000 Millennials bought homes in SA between 2015 and 2017, 70 percent of which were first-time purchasers. Gerard Kotzé, MD of RealNet says that Millennials have tended to be late bloomers when it comes to property ownership: “Over the past 20 years the average age of first-time buyers has pushed up above 35 from around 27. But these patterns are shifting again. In a recent survey of prospective home owners by Clever Real Estate, all the millennial respondents said they were intending to buy within 12 months.”

Agents have realised however that statistics or statements suggesting that Millennials may have the ability to transform a sluggish property market can’t be depended on, in the same way that we can’t depend entirely on stereotypical analysis.

See more: How to sell your home to Millennials

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