Hipsturbia - A Millennial Generational Property Trend Towards Accessibility And Affordability
According to Property Wheel, a vast number of factors influence where and how we choose to live. Two of these are most certainly when we born and the context in which one of these is most which we grew up. Millennials, between the ages of twenty-four and thirty-nine, account for almost 30% of the total population according to Statistics SA, representing the largest generation to enter the country's workforce (51%).
More than 300 000 South African Millennials purchased property between 2015 and 2017, according to Lightstone Property, of which a third were first-time homeowners suggesting that this category wields significant buying power and impacting current property development trends.
Millennials are all about the neighbourhood says urban property development firm, Blok who 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 interesting insights as to what factors were driving the buying decisions of Millennials.
"We saw that the majority prioritised living in a good neighbourhood with easy access to lifestyle centres, restaurants and shops" reveals Jacques van Embden, Managing Director at Blok.
Not unique to South Africa but a global trend, The Chicago Business Journal says that 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 prioritize 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 and to nature. One report leased 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.
Millennials are 'poorer'
Another, somewhat more pragmatic reason why Millennials are increasingly opting for a smaller private space is because they are 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 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."
Millennials 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."
"Millennial buyers value investment security, convenience and lifestyle benefits, - and they don't want to miss out on any opportunities that come their way."