08 Jan 2013
The past few years have been an extremely interesting time that has irrevocably changed the real estate market as we know it.
This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who says the housing crisis experienced at the end of 2008 changed the dynamic of the real estate environment and has impacted most in some way, however, not all of the results have been negative.
Goslett says that as a result of the recession, this generation of homebuyers has become increasingly more knowledgeable about homeownership. He notes that this is partly due to the fact that property ownership and access to finance requires more preparation and planning, along with the increased media coverage of real estate topics that home buyers have been exposed to over the past six years.
Younger consumers believe that the recession has made them more knowledgeable about the property market than their parents were at their age, he says. "The increased amount of information regarding real estate and easier access to the information via the internet and property search portals has led to many consumers doing their homework more thoroughly before making one of the biggest investments of their lives.”
A large majority of consumers aged between 18 and 35 still believe that homeownership is a key indicator of success and are willing to do what it takes to be able to purchase their own home. Statistics suggest that 75% of consumers in this age group consider homeownership a fundamental indictor of success over taking an extravagant holiday or owning an expensive car.
“Although the stringent lending criteria of financial institutions have made purchasing a property more challenging now than it was before, compared to the property boom period, many potential first-time buyers are eager to do the necessary research and save the required deposits, even if this means a change of lifestyle,” says Goslett.
While it is the Generation X population, which consists of adults between the ages of 31 and 45 who are generally well established in their careers, that is currently the most active and driving the real estate market, the Generation Y demographic, which consists of adults younger than 30, is a much larger generation and has already made their presence felt in the market. Statistically the population in South Africa shows that there were 18.74 million births (Generation X) between 1965 and 1985, while approximately 28.4 million consumers make up Generation Y.
Goslett says that the larger generation will mean that the demand for property will steadily increase as Generation Y comes of age to purchase their first property. However, considering that the average age of a first-time buyer in South Africa is in the mid-thirties and the oldest Generation Y’s, born between 1985 and 2010 are now only 27, it could take some time before this generation reaches its full economic potential.
“The Great Depression shaped the lives of The Greatest Generation, while the oil crisis during the 1970s impacted the Baby Boomers. Generation X and Generation Y are now leading the real estate market after the largest modern day housing recession we have seen.
"It seems that every generation has faced certain economic circumstances that have changed their collective perspective in some way. Today’s generations believe that the risks, details and rewards of purchasing a property are integral to their planning for future financial success,” Goslett says.
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