Born between 1981 and 1996, millennials – now aged 26 to 41, are a prime segment of home buyers in South Africa.
In fact, aspiring home owners between the ages of 25 and 44 made up 48% of all traffic to remax.co.za in 2021, says Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa.
Comcorp Mortgage Software data for May 2022 shows that the average age of first-time bond applicants was 37.
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“Although the basic principles of selling remain the same among all buyers, there are a few subtle shifts sellers and real estate agents will have to make when selling to buyers within this age group,” Goslett advises.
The first thing he says sellers and real estate professionals need to consider is that, compared to previous generations, millennials are starting businesses earlier and are launching twice as many businesses as previous generations, largely owing to the technology available to them. This generation tends to be better suited to entrepreneurship thanks to their digital comprehension and the spirit of ‘start-up culture’ that surrounds them.
“The challenge when selling homes to young entrepreneurs often comes down to sourcing the necessary financial backing and acquiring bond approval for them. The process of a bond application looks a bit different for those who are self-employed, so I would encourage real estate professionals to do research to know how to support these kinds of buyers,” Goslett recommends.
Millennials have also grown up surrounded by technology, so they know how to use tech-savvy tools to find answers when they have questions.
“They have often done their own market research beforehand and they also know how to fact check. This means that millennials will know the value of other comparable homes in the area and are unlikely to make an offer if your home is overpriced.”
Real estate professionals need to therefore be prepared to answer questions and to be honest if they do not have the answer on hand.
“It is never a good idea to make up an answer if you are unsure. Millennial buyers will respect you more if you are 100% honest and transparent with them. Admitting that you will do research and get back to them, rather than possibly sharing false information, will earn you favour.”
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Demand for eco-friendly and tech-enabled properties
Millennials also tend to prefer homes with self-sustainable features, such as solar panels or grey-water systems, so sellers who are hoping to attract this market “might want to install a few eco-friendly features to help make the home more appealing to buyers”.
Cobus Odendaal, chief executive of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg, says first-time home buyers, especially, are interested in anything that will save them money in the long run, although almost every potential buyer will be looking to limit their monthly spend on utility bills considering the rising cost of electricity.
“In fact, millennials who now make up the largest property buying group now often expect energy efficiencies like solar geysers to be installed in homes and eco-friendly features will also win them over.”
He adds that no other generation is more aware of what today’s technology is capable of than millennials, and their inherent dependency on technology will affect the way they view homes.
“If they have to decide between two similar properties, they’ll always be drawn to those with strong cell phone service and high-speed Internet connectivity.”
A renewed interest in inner-city living
Younger millennials and gen Z buyers aged between 20 and 35 are also reclaiming South Africa’s inner cities, says Justine Adriaanzen, commercial real estate consultant for Galetti Corporate Real Estate.
When the COVID-19 pandemic first hit in 2020, the Central Business Districts (CBDs) of the country’s major metropolitans became ghost towns as office workers were forced to work from home. Two years later, however, some working professionals have chosen to take advantage of flexible work-from-home policies and flee the city for smaller towns, often in search of a more relaxed lifestyle for their family.
The under-35s have moved in to take their place and revitalise CBDs.
“This age group typically has more disposable income and therefore greater spending power, and they are choosing to inject that cash into the inner-city.”
She explains that renewed interest in the country’s major CBDs from a younger demographic will have a positive knock-on effect on the economy and property market at large.
“Property developers are capitalising on this new market by converting old and/ or abandoned buildings into trendy mixed-use developments.
“More local businesses such as clothing boutiques, homeware stores, artisanal retailers, upmarket bars, and restaurants are now opening to cater to these residents and office tenants. Renewed investment and activity have also motivated city officials to ramp up crime prevention to revitalise key CBDs.”
Much of what makes the CBD attractive to the younger demographic, Adriaanzen says, is the fast-paced and creative lifestyle it offers.
“Savvy property developers are noticing the demand and are fulfilling this age group’s desire to move to the CBD.”
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