Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

Generation Z poised to ‘age down’ SA’s property market

10 Sep 2019

Property News

Brought to you by Property24

Generation Z, born between 1995 and about 2010, are the world’s ‘digital natives’, who have been exposed to the internet, social networks and streaming media their whole lives, and they are proving to be very different from the millennials born between 1980 and 1994 - especially when it comes to their views on property.

Coetzee says Gen Z home buyers are not only prepared to give up big weddings, shopping expeditions and travel, but also prepared to spend less on tertiary education, take on a second job and live with their parents so they can save a substantial deposit.

This is according to Carl Coetzee, CEO of national bond originator BetterBond, who notes that a Bank of America survey earlier this year indicated that more than 50% of 18 to 24 year olds were already saving to purchase their first home and that 59% were actually planning to do so within five years.

“The survey also found that to achieve this dream, these young adults are not only prepared to give up big weddings, shopping expeditions and travel, but also prepared to spend less on tertiary education, take on a second job and move back in (or continue to live) with their parents so they can save a substantial deposit.”

The reasons that Gen Z is showing significantly different consumption patterns is that its members are more individualistic and entrepreneurial than earlier generations

He says this makes them very different from the millennials who currently make up a large percentage of the population, but are also known as ‘Generation Rent’ because of their well-known reluctance - or inability - to commit to homeownership until they have had enough of travelling or paid off a mountain of student debt.

“Our statistics show that due to this millennial drag, the average age of first-time buyers in South Africa has risen from 24 to 36 over the past 20 years, but we believe this figure could tumble now if the local members of Gen Z follow their counterparts elsewhere in the world - which it is highly likely that they will do because of the increasing globalisation of trends via social media,” says Coetzee.

Coetzee says that one of the reasons that Gen Z is showing significantly different consumption patterns is that its members are more individualistic and entrepreneurial than earlier generations, and thus more likely to start their own businesses after leaving school.

“They are also more willing to self-educate through short courses and online learning, and are developing a preference for owning property in rural or suburban areas (unlike the urbanite millennials), which has caused them to also be referred to as the ‘Homestead Generation’. Many of them work remotely, so they can happily settle anywhere that has a good internet connection, and they tend to be very eco-conscious, with a penchant for growing their own food and making their own products while promoting sustainability though recycling, re-using and reducing.”

However, to achieve their dreams of property ownership before 30, Coetzee says prospective Gen Z buyers should engage with a reputable bond originator and secure prequalification for a home loan before going house hunting.

“Taking this step will give them a clear idea of their buying power and enable them to focus their home search on properties they can afford, taking into account the additional costs of purchase including transfer duty, legal fees, bond registration and insurance, and additional ongoing costs of ownership including maintenance, property tax and local authority service charges.”

Coetzee says that bond originators also use a multi-lender submission process for home loan applications which ensures that prospective borrowers obtain the best possible interest rate applicable to their financial circumstances. “This is important because even a relatively small rate concession can result in a significant reduction in the total cost of the property over the lifetime of the home loan.”

“Currently, the average variation between the best and worst rates offered on each home loan application we submit is 0.5%, and on a 20-year bond of R1.5 million, that translates into a potential saving of more than R120 000 in interest, plus a total of about R6 000 a year off the monthly bond instalments.”

Print Print
Top Articles
A pioneering partnership between Emira Property Fund and Beetle Busters, who’ve registered a treatment for the infestation, brings hope to saving our urban forests.

Cape Town at US$5 600 per square metre ranks as the most expensive city for residential property in Africa, followed by Umhlanga and Sandton. See the list...

Yearning for a country home where you can relax and unwind away from the city grind? With affordable prices, these homes in Greyton offer a soothing lifestyle…

Loading

Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.


Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724