Mind the property gap - Millennials versus Baby Boomers
Category Newsletter: Article
There is on average a thirty to forty year age gap between the millennial and baby boomer generations. Given that the latter grew up in the 1970s-1980s when the South African property landscape was very different compared to the late 1990s-2000s when the millennials grew up, there is a big gap in terms of how they look at property.
For starters, the 1970s-1980s property landscape comprised predominantly of freehold homes with the odd block of flats, generally regarded as social housing. There was plenty of land and property was generally cheap. In the early 1980s, you could buy a new three-bedroomed starter home in a middle-income suburban area for around R20 000. Today, some thirty years later, a similar middle-income area house will set you back around R1.6m million.
Back then, the trend was to move out to the suburbs as there was not much traffic to speak of. Today, traffic is a major issue while, at the same time, property prices are escalating beyond the reach of many youngsters. Today’s world is also techno-driven with almost everything being available at your fingertips in an instant.
Millennials, or those below the age of 35, therefore look at property very differently. Although affordability is an issue, property ownership ranks as a priority and is a great source of pride for any first time home buyer. In some areas, millennials comprise up to 20%-30% of buyers, but they will come to dominate the property landscape in the next ten to twenty years.
Millennials tend to migrate more towards compact sectional title housing and urban areas such as the Cape Town CBD, Green Point, De Waterkant and Sea Point along with other high-density areas such as Claremont/Wynberg, but really wherever there is compact housing at affordable prices.
While this type of housing is chosen for its relative affordability, it is also a lifestyle choice for Millennials. This generation enjoys the urban vibe that is seeing a revival, not just in Cape Town, but in other major metros as well. They want to be close to hot hangouts, eateries, pubs and clubs and are quite health and body conscious and look for areas with gymnasiums and fitness facilities.
Where Baby Boomers spent most of their free time at home, Millennials tend to go out often, not just over weekends, but also during week nights. They are quite social and often have large groups of friends.
Millennials may also not necessarily think about moving to a freestanding house at a later stage, but might just upgrade to a bigger townhouse or apartment, especially if they are looking to remain in urban areas that are close to business hubs and areas with a café culture.
Where older buyers wanted more space, big houses and big yards, millennials want trendy finishes. They want interesting living spaces and tend to set trends such as the industrial steel and glass or reclaimed wood trends.
Being the techno savvy generation, aspects such as good internet access and fibre optic connectivity is important when they choose homes and neighbourhoods. Online is where they look for property. As avid readers of online content, they may well know a thing or two about property markets and prices, especially if they have a keen interest in property as many do. Be prepared also for communication via WhatsApp and messaging and emails for more formal communications.
Millennials tend to be most active in the sub-R1.8m price band, but there are professionals who are buying in upper income areas such as the Atlantic Seaboard, CBD and City Bowl. Apartments tend to the best seller to millennials, largely as these are more affordable and readily available in the lower price bands compared to houses.
This buyer demographic generally need a housing bond to assist them to buy property and therefore often need some counselling in terms of ensuring that they qualify and that they are aware of the onerous documentation requirements.
Interestingly, Baby Boomers are now also downgrading, often to sectional title property. As they are generally in their late fifties and sixties, they no longer want to be burdened by big houses and plots that require maintenance. So, you can now find a Baby Boomer sell up their large Bishopscourt or Constantia property and move to a more compact sectional title apartment or townhouse, often in the CBD or on the Atlantic Seaboard where they can enjoy the fabulous sea views and benefit of seaside walks and picnics.
Author: Coastal Property Group
