Meet the new property buyers
By Colleen May
Born roughly between 1985 and 2010, Generation Y or the millennials as they are called are the new face of property buying. Who are they and what do they want? The millennials are the tech-savvy generation; having grown up in the midst of constantly changing and evolving technology, they consume information at a rapid pace and are always on the go. So, when it comes to property, what do the millennials want?
To fully understand the needs of the new generation that is currently entering the market, it’s important to understand where they come from. Having been born to the baby boomers, who are now retiring and making way for the millennials, some grew up surrounded by white picket fences in a fixer-upper in the suburbs, while many millennials grew up in a society that was vastly different to that of their parents. The previous generation was a fractured one, segregated, violent and at odds with one another; there was an education system in place only for those of a specific race and information was limited to newspapers, TV and radio. The landscape of the 1960s was a far cry from the landscape of the 1980s. The children of the millennium grew up with cell phones, information that was a click away, with an education and a desire to do better. Social networking and media has always been a way of life for this generation, they are connected and in the know, with more choices than their parents ever had. This generation doesn’t want to wait; if they want something, they want it right now.
The millennials’ childhood has set the stage for what they want out of their property. Millennials want to own houses close to work and close to the city, they work long hours and don’t want the long commute to and from work. Socialising is a key factor for them and life close to the city means not being left behind. Urban housing near shops and mass transit is becoming increasingly popular, and this will bring a shift in the real estate market. Carol Reynolds, Pam Golding Properties’ area principal in Durban, Durban North and La Lucia, comments about her areas, “Today’s purchasers are diverse and generally astute. With the huge technological advancements that have been made in the past decade, today’s purchasers are able to find information for themselves at the click of a mouse or the touch of a smartphone. We are therefore finding that buyers come into the marketplace having done some of their own research, generally requiring a professional agent to assist them with the specifics.” Armed with technology, the millennials know what they want and how to get it.
So what do they want in a home?
Jonathan Skeen of Emergent Energy explains, “Green concerns are an increasingly important component of the property buyer’s evaluation criteria. In the past, cheap and abundant electricity, water and waste services meant that the motivation to ‘go green’ was largely a personal decision driven by the desire to reduce one’s personal environmental impact. In the present, however, green or sustainable building designs and management practices are directly linked to very real, long-term economic concerns.” Millennials are very eco conscious, they are aware of their environmental surroundings and they want to reduce their carbon footprint, and at the same time save money on living costs, particularly with the cost of electricity on the rise.
Millennials don’t want fixer-uppers; they want to move into homes that require little to no maintenance. They don’t want the hassle and time-consuming process of refurbishing an older house and making it into their dream home; this generation wants to move right into the dream home. Tony Ketcher, managing director of Seeff Randburg, says, “One of my concerns is that the buyer of today (and tomorrow) is looking for a product that is not readily available now – for example, big homes are not as popular as before, so we have sellers wanting to retire or move on but the buyers are not necessarily looking for that type of home. It sort of makes sense if you think how our environment, lifestyles and affordability have changed over the past 20 years.”
“Many young professionals are buying and they seem to be most focused on sectional title/apartment/cluster living. Busy jobs mean there is not much time to worry about gardens and home improvement and they want to get away at weekends or holidays so the lock-up-and-go concept works for them. I find that a free-standing home does not even come into the thoughts of many of them,” says Ketcher. With busy, on-the-go lifestyles, the next generation of buyers doesn’t want big homes; they want homes that are small and easily adaptable. Millennials want homes where the rooms are multipurpose, and can be used as an office, a guest room or a future baby room. Cosy and flexible is what they are looking for; gone are the days of a room for every need.
Entertainment makes up a great portion of the millennials’ lives. If they are not out and socialising, then they want the option of a ‘chop and dop’ at their home. An outdoor area, albeit a small one, is quintessential for the millenial’s style of modern living.
Having grown up in the technological era, the millennials don’t just want homes that are technologically compatible with their lifestyles, they demand it. Hi-tech is a high priority and they look to their homes to integrate their lifestyles with the technology available to them, whether it’s Wi-Fi or smart homes. Adrian Goslett, CEO of RE/MAX, comments, “While in the past this was reserved for the more affluent homebuyers, advancements in technology and devices that use Wi-Fi or other wireless connections have made this home feature increasingly more accessible. With the right installations, homeowners can control aspects of their home through applications on their smartphones and tablets. These are the kind of things that younger buyers have in mind when searching for their ideal home. Each generation makes buying decisions based on the trends and technology that are available to them and the current generation has the world’s cutting-edge technology at their fingertips.”
With this technology the new generation of property buyers is far smarter and savvier than their older counterparts. They have sufficient information at their fingertips to make informed decisions about buying a house when they enter the market. They know what they can afford, they know what they want and they know how to make a deal.
While the millennials are the current buyers of property, they are not the only ones; along with the millennials there is the black middle class (BMC). According to Seeff, earlier this year the UCT Unilever Institute of Strategic Marketing reported that the BMC had more than doubled over the last eight years to around 4,2 million in 2012, up from 1,7 million in 2004. Home buying amongst this group is also improving according to the latest FNB Estate Agents Survey. It indicated that previously disadvantaged buyers now account for more than half of all homebuyers, with BMC buyers making up about 32%, up from about 23% in 2005.
“A survey of Seeff’s more than 200 branches nationally confirms that there is a notable shift in buyer demographics in the more affordable and middle class suburbs in the main metropolitan areas. In some instances, more than half of all buyers are now from the BMC demographic group,” says Seeff chairman, Samuel Seeff. “The most active price band is between R500 000 and R1-million and most buyers look for neighbourhoods with good infrastructure, including transport and access to schools.” It is interesting to note the difference in their buying needs; while the millennnials focus on technology and living in the now, making their homes meet current and future needs, the black middle class look to the suburbs and property close to schools. In essence they are looking for secure lifestyles. David Shevil, GM of Just Property group, says, “Today’s property buyers are the young, up and coming professionals (yuppies) who are being headhunted by top companies; there is also the black diamonds factor, a group that is getting heavily involved in the property world.”
With millennials altering the needs of the property market, this could lead to an interesting shift in demand and supply. Green, small technological capable homes will be more in demand and older, fixer-uppers will lag behind, creating a surplus of older homes and demand for new, modern housing. Even with the black middle class taking up some of that surplus of older homes, it is the millennials who will dictate the demand and indeed the supply of new residential property.