MILLENNIALS’ HOUSING CHOICES
Millennials comprise one-fourth of the workforce in Asia Pacific and are a rapidly growing source of spending power. Their growing influence is already driving new trends in real estate markets across the region
20 Jul 2018
Born towards the end of the last century, millennials now make up for the youngest segment of the workforce - the fresh talent that employers are eager to attract. Central to CBRE’s interest, the organization came out with a detailed survey on MILLENNIALS: MYTHS AND REALITIES for a deeper understanding into their lives with a strong focus on their real estate choices. Where do they want to live and work? What type of an office environment do they prefer? What type of shops do they want to visit, or do they want to do everything online? This extensive and detailed global study tried to address all these questions across all geographies, globally.
Who are these millennials? And what are their preferences when it comes to real estate.
India is expected to be one of the youngest countries in the World by 2020, with the current median age being 27.6, which is lower than that of many countries including USA, Germany and China. As the youngest generation in the country, the group is an object of fascination for everyone from sociologists to FMCG marketers. And it’s not just the generation’s size that has drawn attention. Its habits, too, seem starkly different from its predecessors. Tales abound of millennials’ strange ways. The findings also suggest, though, that more than any generational preference, money is the main factor driving these choices.
Millennials comprise one-fourth of the workforce in Asia Pacific and are a rapidly growing source of spending power. Their growing influence is already driving new trends in real estate markets across the region, making it essential for occupiers, retailers and developers to gain a thorough understanding of their behaviours, requirements and priorities. Millennials are often perceived as preferring informal employment, changing jobs regularly and avoiding financial responsibility. However, CBRE Research has found these observations to be superficial. As with previous generations, most millennials save money to buy a home, spend prudently and aspire to carve out a stable career. Our understanding of millennials, therefore, should not be based upon perceptions or stereotypes. The report, titled Millennials: Myths And Realities, took housing as one area of focus, where millennials are perceived by many to be particularly hesitant - reluctant to move out of their parent’s homes and, when they do, more likely to rent than buy. And, the survey suggests, there’s a germ of truth to this characterization: A high percentage of millennials do live at home, and renting is relatively popular among the cohort who have moved into their own places. The findings also suggest, though, that more than any generational preference, money is the main factor driving these choices.
Of the millennials surveyed, 49 percent live at home with their parents, with 43 percent of these planning to stay for three years or more and 12 percent having no plans to ever leave. As the report observes, though, it’s not the home cooking that’s keeping them around.
Rather, “high property values drive the decision to stay,” the authors note. “Steep housing prices and rents, coupled with a lack of suitable jobs, mean that many millennials are not earning enough to live an independent life. For an increasing number, the trade-off is to remain with the folks. Of those who can afford to live independently, many choose to stay at home to save toward deposits on homes of their own.”
At a time in their lives when most young adults are striving for greater freedom and independence, around half of millennials globally still live in the family home. This phenomenon is even more prevalent in Asia Pacific, where almost two-thirds of the region’s young adults are still living with their parents. This is largely due to cultural practices in Asia, where parents usually house their sons and daughters until they get married. The high cost of residential property in many markets is also a factor.
The financial burden of purchasing a property is the major reason behind the high percentage of Asia Pacific millennials still living with their parents. The rate of home ownership among millennials in the region is just 11%, compared to the global average of 15%. Rates of home ownership among millennials in Hong Kong, India and Japan are even lower, at around 5%. The excess liquidity pumped into the market following the onset of the Global Financial Crisis (GFC) in 2008 substantially inflated property prices in most parts of the region and lifted housing prices out of the reach of most young adults. Median housing prices were more than 10 times greater than average household income in all tier I cities in markets covered by the survey. The higher the price multiple to income, the more likely it is for a millennial to continue living at home.
That millennials are more likely to rent than own is also true, with the survey finding that 64 percent of those living independently rent their homes. Again, while a subset (29 percent) do so out of preference, a much larger proportion (65 percent) do so for financial reasons, belying the common stereotype of millennials as commitment averse. In fact, the report found that more than two-thirds of millennials plan to own a property in the future.
However, homeownership decisions by younger households have much more to do with affordability than location and lifestyle preferences. Until then, they will continue renting. For most of them buying a property means sacrificing elements of their lifestyle. However, most millennials still want to purchase their own property in the future, provided that doing so does not negatively impact their quality of life.
MGMT's "Time to Pretend" puts it ideally - I'm feelin' rough, I'm feelin' raw, I'm in the prime of my life. At least when it comes to housing, millennials love to live it up, love to get together ... and it’s all about the living experience for them.
Who are these millennials? And what are their preferences when it comes to real estate.
India is expected to be one of the youngest countries in the World by 2020, with the current median age being 27.6, which is lower than that of many countries including USA, Germany and China. As the youngest generation in the country, the group is an object of fascination for everyone from sociologists to FMCG marketers. And it’s not just the generation’s size that has drawn attention. Its habits, too, seem starkly different from its predecessors. Tales abound of millennials’ strange ways. The findings also suggest, though, that more than any generational preference, money is the main factor driving these choices.
Millennials comprise one-fourth of the workforce in Asia Pacific and are a rapidly growing source of spending power. Their growing influence is already driving new trends in real estate markets across the region, making it essential for occupiers, retailers and developers to gain a thorough understanding of their behaviours, requirements and priorities. Millennials are often perceived as preferring informal employment, changing jobs regularly and avoiding financial responsibility. However, CBRE Research has found these observations to be superficial. As with previous generations, most millennials save money to buy a home, spend prudently and aspire to carve out a stable career. Our understanding of millennials, therefore, should not be based upon perceptions or stereotypes. The report, titled Millennials: Myths And Realities, took housing as one area of focus, where millennials are perceived by many to be particularly hesitant - reluctant to move out of their parent’s homes and, when they do, more likely to rent than buy. And, the survey suggests, there’s a germ of truth to this characterization: A high percentage of millennials do live at home, and renting is relatively popular among the cohort who have moved into their own places. The findings also suggest, though, that more than any generational preference, money is the main factor driving these choices.
Of the millennials surveyed, 49 percent live at home with their parents, with 43 percent of these planning to stay for three years or more and 12 percent having no plans to ever leave. As the report observes, though, it’s not the home cooking that’s keeping them around.
Rather, “high property values drive the decision to stay,” the authors note. “Steep housing prices and rents, coupled with a lack of suitable jobs, mean that many millennials are not earning enough to live an independent life. For an increasing number, the trade-off is to remain with the folks. Of those who can afford to live independently, many choose to stay at home to save toward deposits on homes of their own.”
At a time in their lives when most young adults are striving for greater freedom and independence, around half of millennials globally still live in the family home. This phenomenon is even more prevalent in Asia Pacific, where almost two-thirds of the region’s young adults are still living with their parents. This is largely due to cultural practices in Asia, where parents usually house their sons and daughters until they get married. The high cost of residential property in many markets is also a factor.
The financial burden of purchasing a property is the major reason behind the high percentage of Asia Pacific millennials still living with their parents. The rate of home ownership among millennials in the region is just 11%, compared to the global average of 15%. Rates of home ownership among millennials in Hong Kong, India and Japan are even lower, at around 5%. The excess liquidity pumped into the market following the onset of the Global Financial Crisis (GFC) in 2008 substantially inflated property prices in most parts of the region and lifted housing prices out of the reach of most young adults. Median housing prices were more than 10 times greater than average household income in all tier I cities in markets covered by the survey. The higher the price multiple to income, the more likely it is for a millennial to continue living at home.
That millennials are more likely to rent than own is also true, with the survey finding that 64 percent of those living independently rent their homes. Again, while a subset (29 percent) do so out of preference, a much larger proportion (65 percent) do so for financial reasons, belying the common stereotype of millennials as commitment averse. In fact, the report found that more than two-thirds of millennials plan to own a property in the future.
However, homeownership decisions by younger households have much more to do with affordability than location and lifestyle preferences. Until then, they will continue renting. For most of them buying a property means sacrificing elements of their lifestyle. However, most millennials still want to purchase their own property in the future, provided that doing so does not negatively impact their quality of life.
MGMT's "Time to Pretend" puts it ideally - I'm feelin' rough, I'm feelin' raw, I'm in the prime of my life. At least when it comes to housing, millennials love to live it up, love to get together ... and it’s all about the living experience for them.