After particularly busy days, we’ve all caught ourselves thinking “I cannot wait to go home”. Breathing a sleep sigh of relief as we step through the front door, the feeling of coming home can provide immediate relief. What does the perfect home look like? While some of us may still fantasize about walk-in closets, expansive living rooms and ample storage, oversized houses are becoming less and less desirable.
Well-designed spaces are becoming increasingly popular amongst the next generation of homeowners. In keeping with global urbanization trends—over half of the world’s population now lives in cities—today’s young home buyers are seeking urban lifestyles that offer accessibility, walkability, and proximity to entertainment, rather than exclusivity or sprawling square footage. Young buyers want to live in neighbourhoods that offer walkability, even in car-centric cities like Los Angeles and Miami. Rather than moving to a secluded, exclusive enclave, they prefer busy, urban lifestyles, and proximity to bars, restaurants, and entertainment.
The average percentage of homebuyers who consider proximity to their place of work a significant factor is only 42 per cent across all age groups, but 62 per cent of millennials find this to be a major factor in deciding where to purchase a home. In Los Angeles, neighbourhoods like Hollywood Hills, which have space for large, highly amenitized houses, still appeal to wealthy young buyers, but so do more densely populated areas like West Hollywood, Venice, and downtown L.A. Luxury-condo development the Metropolis, in downtown L.A., for instance, is drawing millennials for its convenient location and amenities.
Another shift towards quality lifestyle is people across the globe increasingly on the move to live alone and having their first child later in life, causing the average family to become smaller. This narrowing of the family form has already had significant effects on household sizes, with the size of the average house in various cities shrinking by 25% over the last five years alone. Millennials seem to want homes just as much as older generations — and that spells a boon for housing demand, they have just as much interest in buying a home as generations before.
The issue of cost is, of course, unavoidable. Millennials also tend to be more price-conscious than preceding generations—something that makes sense when one realizes they are still in the early stages of accumulating wealth as a consequence of the great recession. If one has to make an apple to apple comparison as an example, at the cost of Rs 45 lakhs, a property investor can get a fully-furnished condo unit in a premium location in Malaysia or Thailand, which not only offers an excellent lifestyle but also a chance to earn 10 per cent net rentals.
Millennials earn 20% less than Boomers at the same stage of life and typically have a significantly lower net worth. Choosing to live in a well-designed and planned home is fast becoming the only option available for first-time buyers craving the convenience of living.
What do these changing preferences mean for real estate? In an era of unprecedented population growth and threats to our environment, the demand for housing from the millennial generation simply affirms our need to build smarter, affordable and at the same time convenient. This is not only taking a major change in the real estate construction process, but also forcing real estate players to change their ideology for marketing their projects. Developers are continuously focusing to build more new properties in the middle of everything, with amenities that foster a sense of community and wellness, as well as offer the kind of high-tech features that today’s young people expect to have at their fingertips. They are also quite savvy about real estate, having come of age with easy access to information about housing via the internet and social media.
