There are a vast number of factors that influence where and how we choose to live, and one of these is most certainly when we were born, and the context in which we grew up.
Defined as between the ages of 24 and 39 years old, millennials account for almost 30% of the total population according to Statistics SA – and also represent the largest generation to enter the country’s workforce (51%).
According to Lightstone Property, more than 300 000 South African Millennials purchased property between 2015 – 2017; of which a third were first-time homeowners – suggesting that this category wields significant buying power. And it is this very clout that we see impacting current property development trends.
We take a closer look at some of the underlying factors that influence the property preferences of millennials.
They’re all about the neighbourhood
Urban property development firm, Blok, recently conducted research to better understand what potential investors were looking for when considering the purchase of property. With 63% of the respondents between the ages of 26 and 36, the survey revealed some interesting insights as to what factors were driving the buying decisions of millennials.
Reveals Jacques van Embden, Managing Director at Blok, “We saw that the majority prioritised living in a good neighbourhood with easy access to lifestyle centres, restaurants and shops.”
This does not appear to be unique to South Africa, but rather a global trend. According to The Chicago Business Journal, it is important that real estate developers construct neighbourhoods that are centred on the idea of community, focusing on principles such as accessibility, affordability and aesthetics.
“Baby Boomers (born between 1946 and 1964) typically prioritise a bigger home, which accommodates their (generally larger) families, whereas Millennials are increasingly settling down later in life and having fewer children than previous generations – and thus, the size of their home is less important.”
What is important is proximity – to both the city as well as to nature. One report released by Urban Land Institute and PwC made mention of a new trend dubbed ‘Hipsturbia’, which refers to a rise in denser, mixed-use neighbourhoods in suburbs located near to the metros, which have become vibrant live, work and play districts.
“We’re seeing a trend of ‘living outside the home’, where millennials seek the lifestyle benefits a certain area affords, over a larger private space,” says van Embden.
Another, somewhat more pragmatic reason why millennials are increasingly opting for a smaller private space is because they’re concerned about affordability – they have to be.
As one of the most indebted generations – and with the pandemic compounding existing financial woes – price is a key factor influencing where they choose to live.
Fifty-six percent of respondents in Blok’s survey earned between R15 000 – R25 000 per month, which naturally weights the current living circumstances of those surveyed towards renting, rather than owning. “This is not because they don’t want to own property, says van Embden, “but rather because millennials want to invest in a modern space with new furnishings – and there is little available that fits the bill, within their price range.”
The vast majority of respondents also indicated that they could only afford a property with a maximum price threshold of R750 000.
“Developers are waking up to this inherent price-consciousness, and we’re increasingly seeing more compact homes (20m2), which tick the box on affordability, while offering the buyer added value in the form of shared features, such as communal spaces in the building that are available to all tenants.”
They value flexibility
Freedom is more important to millennials than Baby Boomers and Generation Xers, as they typically lead more transient lifestyles. Deloitte’s 2018 Millennial survey identified that flexibility and freedom were key priorities within this age group, and while the study relates to millennials in the workplace, these findings can be extrapolated across the property industry.
“While our research has shown us that this category of buyers want to own property, they also need to be able to lock up and go when a travel or work opportunity arises. They need a home that allows them to do this and as a result, developers are designing more agile products that adapt to market movements, marrying shared spaces with a serviced offering.”
These factors are the inspiration behind Blok’s latest development, SIX ON N, which offers an innovative solution for those seeking a more agile, affordable investment. The 87-apartment development – located on the prestigious Norfolk Road in Sea Point – boasts a number of exciting features such as an on-site deli, communal boardrooms, a rooftop deck with pool, fitness studio, as well as an integrated workstation in each apartment.
“Millennial buyers value investment security, convenience and lifestyle benefits,- and they don’t want to miss out on any opportunities that come their way.”