As investing in residential property, for most investors, is a long-term strategy, it is important to understand the needs and wants of the emerging demographics, as opposed to what your own generational preference is or was.
There is a vast difference between the needs and wants of a baby boomer over the needs and wants of Gen X, Y, Z., or Alpha. Currently Gen Z and Gen Alpha, make up around 20% of the global workforce, so it is vital to understand their wants and needs when investing for the long term.
The Research.
In surveys conducted ten years ago, millennials used to say that they would never want to live in the suburbs, and they initially showed little interest in getting married or even starting a family [1].
Rentvesting was then born, where those keen to get into the market could do so but rent in suburbs they prefer to live.
The older millennials and having children, are now surprise, surprise, wanting a house and land and besides their earlier preferences, are moving to the suburbs and currently even to regional areas not too far from capital cities due to the effects of the pandemic.
The combined data now have millennials accounting for more than one-third of all home purchases!
In fact, for those of us old enough to remember how the Baby Boomers transformed the housing market, it is easy to imagine that this generation, the Millennials, will do the same; even though research has shown that younger generations lag behind previous generations in terms of milestones like homeownership and marriage.
Then comes Gen Z who within a decade will too emerge as 20% of the workforce and growing to around 27% by 2025. It is predicted by 2034, the most common household will be childless.
What and where will their living preferences be when predictions say they will probably have 18 jobs across 6 careers and probably live in around 15 homes in their lifetime?
Key Takeaways.
At the end of the day, all investors must take into account the shifting wants and needs of the emerging demographics. The longer the strategy, the more understanding one should have of the differences of a generational need.
Who are the renters I want over a long period?
Who is the owner-occupier I want to purchase my property when the time comes to sell?
Understanding these shifting dynamics is critical to making the right investment and once again, points to not allowing one’s emotions to make the decision and most importantly, always let the research and the numbers do the talking.
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Warren Jacobs - National Business Development Manager at Meridian Australia
P: (02) 9939 3249
Disclaimer: When considering purchasing a property, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your circumstance.
References:
[1] Mark McCrindle