Millennial housing

Studies have shown that millennials are expected to have an enormous impact on the housing market. Associate Dean and Director of the School of Real Estate, RICS School of Built Environment, Sunil Agarwal FRICS explains why it is critical for us to understand the way they think to ensure we don't alienate future home buyers.

Sunil Agarwal FRICS

What are millennials' housing preferences? Do they like living with their parents or do like living independently?

We are seeing both these trends play out. The greater trend, however, is young adults living with their parents, unless they move to a different city to pursue career opportunities. Moving out of a parents’ home costs money and time. There is also a cultural and social taboo attached to living away from parents.

What kind of social taboo are you talking about?

In India, for instance, we have very close-knit families; young adults are not encouraged to be independent. Moving out of a parents’ home when you are living in the same city as them could imply that you have a family feud going on or that you don’t care for your parents.

It is not very common for millennials to rent a home away from their parents if they live in the same city. Having said this, millennials tend to move around quite a bit for their career, so they do live independently when they move to a different city.

Is it true that millennials prefer to rent homes rather than buy?

Renting a house is more convenient than buying because it is cheaper and it offers flexibility and freedom. Buying a home requires a commitment to stay in a location for a long period of time. Millennials like the freedom to change job or location that comes with renting a home. Also, millennials can only afford a home in a trendy location if they rent; affordable homes are often in far-away locations with little or no infrastructure, which does not appeal to them.

Does this mean that the real estate market is missing out on a large chunk of home buyers?

No, this is not true. Buying a house requires long-term financial commitment towards mortgage payment and maintenance of property, which does not appeal to millennials. This does not mean that millennials do not buy property. They do invest, but they are entering the housing market much later than previous generations did.

Would you say that millennials spend money differently than the previous generation?

I would. Millennials tend to spend more on experiences. They don’t think twice before buying the latest gadget or a designer label. Clearly, millennials have a different set of priorities than their parents. Convenience is very important to them.

If we talk about their home choices, millennials are happy to invest in serviced apartments, which are very convenient for career professionals. There is a strong demand for such homes. If developers build the right kind of apartments with amenities that millennials are looking for, they can easily tap into the latent demand for homes. Developers in cities are doing this by building serviced apartments, which have every convenience that one can think of.

Online learning: Smart FM — Requirements for the millennials

Comments (1)

  1. Very interesting article - reading it the day Resolution Foundation reports that 1/3rd Millenials will be renting by the time they retire. Stats clearly show a decline in number of (children) families in owner-occupied homes.

    Sunil's point is all the more interesting for bringing cultural values into the discussion - when all too often it's usually just about money. Also that there does seem to be a sector of reasonably well-off Millenials who are looking for (or aspiring towards) something other than the larger, 'family' type home. Developers and predictors would be very well advised to look at how many attitudes are changing in (not just) 'multi-cultural' Britain, but also in terms of lifestyle concepts amongst a generation used to short-term contract employment, less opportunity for workplace advancement, reduced prevalence of 'conventional' family units and a general trend towards 'flexibility' in many areas.

    The next few years will be very interesting (Brexit aside) to see if there is a confirmed trend away from - and suggesting the creative creation of - alternative forms of tenure that better suits the evolving Millenial generation (Gen Y) (and Generation Z beyond).

    Thank you Sunil - one of the more interesting things to read amongst this week's Construction/Property news articles.

    Miles Forsyth Miles Forsyth, 17 April at 09:42AM

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