Written by Stefan Kostarelis
“Millennials” is a term that refers to a generation born between the mid-1980s and the early 2000s.
Also known as Generation Y, Millennials are typically aged between 18-35.
Who are they?
Millennials are the first generation in history to have grown up totally immersed in digital technology and are mostly university educated and technologically savvy.
Negative stereotypes of millennials suggest that they are selfish and narcissistic, encouraged by the culture of the selfie to only care about appearances.
However, other research has showed that millennials are in fact very civic-minded and believe in equality for all. This sentiment is reflected in the numerous millennial-led protests that have happened across the world and in movements such as Black Lives Matter.
Virtual communities have made millennials more aware of others and more entrepreneurial. Due to a lack of job security, millennials are more likely to launch startups, and the idea of a “job for life” is alien to them.
Considering how millennials differ from previous generations, it isn’t surprising that they are taking a different view of the real estate market.
In late 2015, Domain predicted that 43% of property buyers within the next three years would be in 18-35 age range, suggesting that we currently in the middle of a surge in millennial purchasing.
However, the traditional method of working one job, saving and then whacking down a deposit isn’t really feasible anymore.
The main reason for this is the rise in housing prices. Last year, The Australian reported that the average 20 percent deposit in Sydney and Melbourne sits at around 150 and 115 grand respectively. Crikey.
So considering that the traditional idea of putting down a sizable deposit on a dream house is out of reach for most millennials, how are they doing it?
Nick Playfair, a residential sales consultant in Sydney’s inner west, told realestate.com.au that millennials make up around a quarter of first home buyers in his area. According to him, millennials are buying property later in life, and spend a lot more time researching the market before making a move.
Rather than saving up for their dream home, many millennial are looking at their first home as an investment property. This means that they are willing to buy a smaller place in a less desirable area as a means to get their foot on the property ladder.
They’re living at home
Millennials are known for leaving the nest later than previous generations. This gives them the opportunity to continue living with their parents while having the mortgage on an investment property paid off by their tenants. Mum and dad are helping out with the loan, too. Recent Research by CBRE found that 27% of Australian millennials get help from parents or guardians for a deposit.
“Rentvesting” is the practice of buying an investment property while continuing to rent, and is another way that millennials are getting a foot on the property ladder. Some see it as attractive due to tax incentives favoring investment, but others feel that it is risky and may cause housing prices to rise even higher.
How can real estate agents win millennials over?
In the past, homes were bought based on their suitability for raising a family, but now the focus is more on property values and investment.
Millennials are tech savvy and thanks to websites such as realestate.com.au they have done their homework. Most likely, they are looking for places that are in growth suburbs and in close proximity to cities, public transportation, and other amenities.
Agents should be looking at first-time millennials buyers as potential life-long clients who may buy two or more investment properties on their way up the ladder.
First impressions are crucial in this regard, and agents must use the power of social media and peer reviews to build trust with their young clients.
Domain Sales Manager Stuart Benson stressed the importance of social media, stating “Millennials are a mobile audience, and one that’s very likely to look for you, find you and engage with you via a social platform…If they can’t see you there, there’s every chance that they won’t see you at all.”
With an increasing number of millennials accessing the internet exclusively on mobile devices, agents should also look into marketing avenues and mobile apps that could enhance their businesses.
For more on how technology is affecting the real estate industry today, you can check out “5 major tech trends that real estate agents can’t ignore”.