These are the types of homes South African millennials in their 20s and 30s are buying
South African millennials are going back to the suburbs, and they are mostly buying pre-owned family homes with three bedrooms, two bathrooms and a garden.
These are the findings of the latest Home Buyers and Sellers Generational Trends report released by the National Association of Realtors (NAR) – which says that the shift will allow current owners of suburban properties to downscale as demand increases.
These older home owners were beginning to fear that the earlier millennial preference for urban living would permanently diminish demand – and affect home prices – in their areas, said the report
As they get older, millennials (who are defined as buyers younger than 36) are increasingly moving from rented apartments and townhouses in urban settings to the suburbs, said Shaun Rademeyer, CEO of BetterBond.
“This is very likely because a huge majority are now married (66%) or in permanent relationships (13%), and almost half (49%) have children under the age of 18 living with them,” he said.
Rademeyer said it appears that millennials are seeking to raise their families in suburban rather than mid-city environments.
The reported data from the NAR appears to confirm this – showing that in the past year 57% of buyers under the age of 36 opted for suburban homes, and that the most popular type of home purchased (83%) was the single-family suburban home with three bedrooms and two bathrooms.
“We are seeing a similar pattern of home buying emerging here in the big metros, with young people who initially opt for rental accommodation in the city centres tending to opt for the suburbs when they start a family and decide to buy their first home.”
According to BetterBond’s latest statistics, the average purchase price for buyers aged 20 to 30 in SA currently falls into the R500,000 to R1 million category, which attracts around 39% of all home loans granted.
In comparison, the average purchase price for 30 to 40-year old buyers falls between R1 million and R1.5 million, a category that attracts a further 18% of home loan grants.
The primary motivator for 50% of buyers under 36 is the simple ‘desire to have a home of my own’, while the quality of the area, convenience to work and affordability are the key considerations in the choice of location.
The figures also show that young buyers in the USA and South Africa have very similar problems when it comes to home finance: the need to obtain a home loan; the need to save a deposit; and debt that makes it difficult to save for a deposit.
Almost all (98%) buyers under the age of 36 said their purchase was financed with a home loan, and 75% said the source of the deposit had been their savings. However, 46% reported having student loans and other large debts that made it difficult to save.
According to Rademeyer, it would take the average South African first-time buyer more than two years to save up the average deposit required to qualify for a home loan.
Read: What R2 million buys you in these sought-after suburbs in Pretoria
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