Across the globe, the largest group of home buyers last year was millennials at some 38%, said America’s National Association of Realtors. On the other hand, said a Redfin study, millennials were still lagging behind GenZ ownership. Both organisations are reputable sources, so what are the millennial home buying patterns in SA?
We reached out to Lightstone, which collates and analyses data from official sources to ultimately provide data and valuable insights across a range of property types.
The history and data facts
This year, millennials are aged between 29-44 years, which in terms of Lightstone data, means we need to look at two of its data breakdown categories:
The facts are somewhat astounding:
- In 2009, the two groups bought a total of 184,679 residential properties.
- From 2009 to 2019, this figure gradually increased, reaching 192,896.
- In 2020, the shock of the COVID-19 pandemic dramatically altered millennial property-buying decisions, dropping the figure to 169,735.
- Perhaps this decline wasn't surprising, but what was rather incredible was that the following year, 2021, saw millennials purchasing properties at their fastest pace on record, reaching 221,799 private property purchases.
- 2022 experienced another decline, though not as sharp.
- In 2023, the decline became more pronounced.
- Last year (2024), millennials accounted for just 156,646 of the total 284,897 property transactions.
- Clearly, this indicates millennials are becoming more cautious regarding property investments.
Reasons for the stall
RE/MAX issued a statement on its website in September 2024, saying that “millennials would rather rent … given the increasing cost of living and challenging economic conditions in South Africa.” Also, millennials “feel that they are not ready to manage a property and prefer to have a landlord take care of the maintenance issues.”
It’s not that millennials don’t value homeownership and it seems they really do want to invest in property in the future, but “rising debt and delayed life events will delay the process,” the report also claimed.
Another property group, Immoafrica, claims that millennials are facing challenges such as interest rates and inflation, that their demands are now focused on “affordability, sustainability, and convenience”. This suggests that if millennial home buying patterns have reduced, as the Lightstone data informs us, then perhaps the market hasn’t adapted enough to embrace millennials’ values and preferences.
Values and mindset
What are those values and preferences today?
It seems that millennials are focused on long-term financial security, such as saving for retirement and investments in stable assets. This is a bit confusing because property ownership is considered a stable investment given that property increases in value over time. The problem may be that there are so many other options on the market today that satisfy millennials’ goal towards long-term financial security, like new technology and cryptocurrencies (even if the latter can be somewhat volatile).
In most cases this sense or fear of financial insecurity derives from witnessing the collapse of global financial markets in 2008, when millennials were either in the recession itself or entering the job market in the recovery period. Either way, they witnessed the impact the Great Recession had on markets, which resulted in the new mindset that they have to protect their wealth for the future. As a result, they sought (and still do) multiple income streams, developed an entrepreneurial mindset, and took a very cautious approach to managing their debt.
Current needs
Across the board, most research reports and information provided by estate agencies indicate that millennials, when they are buying homes, are looking for specific features, which include:
- Open-plan homes.
- Smart systems and tech.
- Sustainable and environmentally-friendly builds e.g., energy-saving features.
- Small properties close to, or with, green spaces.
- Vibey, urban environments close to cultural, cafe society, and sporting activities.
Another developing trend is that millennials are moving back to their family home, and their parents moving into a garden cottage on the same property. Some even choose to share the house, meaning three generations may be living together. This multigenerational property provides benefits for both the older and younger generation, financially and from a lifestyle perspective, whilst still providing a level of privacy and independence.
This introduces one of the newer attitudes that millennials take to homeownership: the growing popularity in their interest in shared ownership and co-ownership properties. They buy with friends or family because it provides an affordable place to live while they set up their investments for the future. Fortune magazine refers to co-ownership as ‘carpooling for homes,’ and which is set to lead the charge in redefining traditional homeownership.
Takeaway
The major takeaway from data such as we have highlighted, is that while millennials do have aspirations for individual property ownership, a large percentage are going to hold back for a while yet, that is unless there is a property that ticks all their boxes and does not jeopardise their goals for financial security.
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