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Millennials contribute to local residential property market

Millennial

According to statistics provided by Lightstone, South African millennials have purchased homes in great numbers over the recent years with almost 330 000 millennials buying homes within South Africa between 2015 and 2017. 70% of these were first time home buys.

Millennials (or Generation Y) are between the ages of 22 and 37 and were born between 1981 and 1996.

Globally, the trend over the recent years has been that millennials have a significant share in the home buyers stake. The National Association of Realtors statistics show that 34% of home buyers in the US in 2017 were millennials, with as much as 60% of these being first time home buyers.

“For most people buying their first home can be a daunting prospect. It is often the single biggest investment they will ever make, and it means a long-term commitment. Buying property is an emotional decision for many, which can be filled with a lot of anxiety and excitement. While millennials may face a number of financial and other barriers entering the property market, statistics show that a fair number of our young people are buying homes” says Nondumiso Ncapai, Head Customer Strategy & Engagement at Absa Home Loans.

The Lightstone data also showed that 39.1% of the 330 000 millennials who bought homes between 2015 and 2017, were buying in the R250 000.00 to R700 000.00 price category, with 36.1% buying homes in the R700 000.00 to R1.5 million price bracket. Almost 14% of these millennials bought homes right at the lower end of the market i.e. homes valued at less than R250 000.00 with 10.8% of millennials who bought homes at the upper end of the market i.e. those with a value of R1.5 million to R3 million and more in 2015 to 2017. A fair share of the millennial demographic being repeat home buyers.

Although most millennial home buyers were first-time buyers in 2015-17, as much as 30.2%, or almost 100 000 of them, were repeat home buyers during this period. This was most probably the result of changing financial and/or family and lifestyle conditions,” says Ncapai.

In terms of the type of properties bought by these millennials, 60% purchased sectional title properties in 2015 to 2017, most likely due to lifestyle and financial reasons. A total of 27% of millennials preferred to buy freehold properties, whilst 13% of them bought homes in lifestyle estates during this period.

35.9% of millennial home buyers (in 2015 to 2017) were living in some of the country’s major metropolitan areas with most of them based in Gauteng in Pretoria and greater Johannesburg, followed by Cape Town, Durban and Port Elizabeth.

“It makes sense that the majority of millennial home owners are based in Gauteng as it is the economic hub of the country. Even in Gauteng the areas which are the most popular among millennials are the ones which see relatively high levels of economic activity,” says Ncapai.