While it may feel like South African millennials are doomed to rent forever, this is not necessarily the case according to Chris Hajec, a managing director at Seeff Randburg.
According to Hajec many millennials (born 1980-2000) have just started to arrive at the age of the average first time home buyer in South Africa (37 years old).
“This means that they are reaching a time in their life where finances are stable, job security good and they are starting to recognise the good business sense and investment opportunity that resides in owning your own home versus renting,” he said.
Hajec added that first time home buyers, of which millennials are fast coming to dominate as a majority of the demographic, were around 26% of the total number of home buyers in Gauteng in 2017.
“The average first time home buyer property price is somewhere around R680,000,” he said.
“That would explain the popularity of (areas such as) Randburg for millennials, as it is is among the regions in Gauteng that could currently be characterised as the epicentre of an affordable entry level (R600,000 to R1.3 million) housing market boom.”
Buying vs renting
According to Hajec, the biggest factor for millennials when buying a home is price, followed only distantly by location and then amenities.
This is because the single biggest bar to millennials is the affordability factor and the need to have accumulated a nest egg to cover a down payment and the costs associated with the purchase of their first property, he said.
“The question (of renting) does become relevant however when you consider the higher lifestyle renting can generally afford you in terms of space and amenities.
“The same money provides you with more amenities and space when renting but less space and amenities when buying, particularly when you factor in the additional costs of home ownership in the upkeep, rates, taxes and other associated fees.
“So I guess that one could say that you are doomed to continue renting as a millennial if you aren’t prepared to compromise and accept what your Rand can buy you in space and extras,” he said.
He added that first-time buyers are also likely to face a gloomy future if they are unable or unwilling to engage in the fiscal responsibilities required for purchasing – namely saving in advance.
“There is certainly a bit of belt tightening associated with purchasing your first home,” he cautioned.