Generation Y, the future of the property market

Although it is the buyers aged between 31 and 45 years old, known as Generation X, that are currently driving the property market, Adrian Goslett, CEO of RE/MAX of Southern Africa, says that the younger Generation Y buyers are eager to get their foot in the property ownership door and have strongly made their presence felt in certain regions throughout the country already.

“It is no secret that today’s conditions are ideal for property investment and while many buyers in the younger generations are finding it challenging to obtain finance, most are putting a higher value on homeownership and aspire to purchase a property of their own,” says Goslett. “Home prices are once again rebounding, unemployment levels among the younger generation are being addressed by government and with low interest rates bonds are more affordable than ever.  The result of this is that 2013 is likely to be the year of the first-time buyer. With the next generation coming of age and preparing to take advantage of the current economic conditions which lend themselves to property investment, it is possible that for the first time, Generation Y buyers who are aged between 18 and 35 years old, could overtake their Generation X predecessors in terms of home buying.”

While Generation X buyers account for approximately 18.74 million South African consumers, Generation Y account for a much larger demographic of the population making up around 28.4 million consumers who are now ready to buy. Goslett says that it is expected that the larger generation of buyers will continue to boost the economy and the residential property market by increasing demand for housing, which in turn will push property prices upwards. Figures from Lightstone, a property statistics and information provider, suggest that many young professionals are taking advantage of affordable home prices in areas such as Woodstock in the Western Cape, where buyers aged between 18 and 35 years old account for 40.8% of the recent activity. In Centurion Generation Y account for over half of the recent buyers, while around 36% of recent buyers in Douglasdale are under 30 years old.

According to the First National Bank (FNB) Property Barometer, first-time buyer activity represented around 23% of the total buying activity in both 2011 and 2012. This is a significant increase from the 15% seen during 2008.  In general 2012 was a better year for the residential real estate market than 2011 and it is expected that the market will continue improving during 2013 with an even higher number of first-time buyers entering the realm of homeownership.
According to Goslett, Generation Y, or millennial buyers as they are also known, are tech-savvy consumers who have a vast amount of information at their fingertips. As a result, most are aware of the fact that conditions are favourable towards buyers, however many have been waiting for the market to show more positive signs of recovery. Considering the fact that demand for property is now gaining momentum, those who have access to finance are more likely to decide that it is the right time to invest before a full recovery and considerably higher prices.

Goslett says that Generation Y buyers will change the face of the property market in that they will be a lot more cautious than their parents when investing and will have a more critical eye. “Many Generation Y’s have witnessed the effects of the recession and have felt the economic repercussions of that period personally. They have watched the dramatic events of the housing downturn unfold and this has resulted in the typical millennial buyer wanting to safeguard their investments against similar events in the future.

“However,” says Goslett, “they have also seen the market turn around and are now more optimistic about the prospect of owning property. While a large number have turned to renting or living with their parents to save money and establish a sound financial footing, many have grown tired of spending money on someone else’s bond and see more sense in paying off their own. The critical step will be for those within the real estate profession to recognise the opportunity the Generation Y buyers bring to the market and meet their expectations,” he concludes.

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