Is the real estate market catering to everyone?
Knowing who’s in the lead when it comes to the property market is difficult. The traditional progression used to be: Finish your studies; find a job in which you’ll stay until retirement; get married; buy a starter home; start a family; work hard and finally retire. That tradition has faded away entirely. The generational divide is nowhere more apparent than in the property market. But is the property market evolving as quickly as society? And is the change happening where it needs to? Statistics show that the average age of home buyers is 44, smack dab in the middle of the Generation X age bracket, which is 38-53. But Gen Xers may have taken in a difficult niche in the real estate market. Currently, more focus is placed on the generations on both other ends, the Millennials (22-37) and Baby Boomers (54-72), trying to accommodate an older generation that is still thriving and looking for ways to enrich their lifestyles, while also trying to find ways to shape the market for the younger generations. On one hand, Gen Xers are often as up to date with technology as Millennials, being comfortable with the digital evolution they’ve been a part of since their first antennaed mobile phones and orange-screened Dos computers. In The Dark Knight Rises, Bane says to Batman, “You merely adopted the dark; I was born in it, moulded by it.” With Generation Xers, it may be the fact that they had to adapt to the changing world and be moulded by it that gives them the head start in the real estate market. On the other hand, Gen Xers are more settled in their careers and focused on their families, bringing with them similar financial stability as Baby Boomers. What makes the Gen X generation so uniquely placed in the economy, is that they incorporate the best of both worlds — being more financially stable, and looking for that stability in their real estate as well, just like the Boomers; but also being able to utilise the advantages of technology and be as connected with the world around them as the Millennials. That said, Baby Boomers are still proving to play an increasingly active part in the shaping of the real estate industry as the norm of retirement accommodations and “old age homes” drastically fall out of vogue. Those nearing retirement no longer want to be locked up in a room that is barely bigger than a school boarder’s hostel room and have three meals and a corner-mounted television provided in the common room. Thanks to improved health, with regular exercise and a healthier diet, Baby Boomers are looking for ways to make the most of their lives after retirement, creating a demand in the real estate market that had been missing for a long time. Millennials, while still the largest percentage of first-time home buyers, owning roughly 38% of the market, play a reasonably small part in property sales. But Millennials choosing to rent rather than buy may be out of their hands if one considers the inflation rate was 5.2% in 2018, and salary increases only averaging at 4.9% (resulting in a take-home increase of only about 0.4%, according to BankservAfrica’s Take-home pay Index). Many Millennials are only now entering their careers, and even when they have started a family, they do not have the same financial stability needed to properly invest in their families or become key players in the buying and selling market just yet. It’s clear to see that shifting the focus accordingly in both the rental and selling spheres has become an essential part of keeping the real estate industry up with the times. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
The Dawn of a Shared Age in Real Estate
“…we may be about to see a shift of generational proportions toward [an]… array of real estate demands, ironically induced – at least partially – by technology. Overcoming isolation is becoming increasingly imperative, as seen in such trends as co-working and co-living.” Emerging Trends in Real Estate: United States and Canada 2020 Collaborative seems to be the keyword in the property market for 2020. While South Africa may not have caught up with the US and Canada in regards to innovative work environments, the change is visible as many South Africans are also relying more and more on freelancing and working from home, while more and more companies outsource assignments which use to be handled in-office. Our property market, however, may have surpassed them already. Over the last decade, the property market that arguably grew the most was that of sectional title properties, such as townhouses and apartments. The popularity of this choice of living arrangement, though, shouldn’t be a surprise at all. Recent years have seen the economic struggles of millennials and even older generations leaving them with little option but to opt for renting instead of investing in their own property. But even for those who can afford it, buying a property in uncertain times feels like too big a risk. When we look at world news, considering the drastic changes in the Russian, English and American political landscapes, for example, it becomes clear that uncertainty for the future is not a “proudly South African” product at all. Over and above the politics, Greta Thunberg’s warnings of environmental threat flood our news feeds whether we want to think about it or not. Simply put, the people who invested in property in previous years, are no longer willing to take the risk. Not on their own, that is. With co-living quickly rising in popularity. Families and friends are sharing yards more often, with garden flats just next to the main house, and often even sharing the house itself. Shared responsibility, shared accountability, and shared safety — this is what drives many homebuyers. Beyond the financial benefits, co-living also increases the sense of community and safety, allowing the residents to focus on the life within their home, instead of the one raging outside. In the work environment, however, SA is sadly still lagging. The workforce is SA is primarily still office-based, relying on a single fixed income from one employer while trying to keep their heads above water. While not everyone’s work allows them to work from a laptop in a coffee shop, the ones who can work remotely are rarely accommodated. This, unfortunately, leads to more office space being taken up, and more office resources being used up than is actually necessary. That said, the market is changing, with home offices expenses now even being tax-deductible. With more professionals choosing to work from environments other than traditional offices, the demand for collaborative workspace and working environments will increase. Working from a home filled with distractions, from TV to chores, simply isn’t ideal. Sitting amidst the smells of coffee and baked goods of a coffee shop, with constant conversation buzzing all day long, is equally disastrous for efficient work. That is why many freelance professionals are searching for workspaces that offer the same conducive environment an office would, without the downside of being constrained by office hours. Environments such as these are, however, rather scarce in SA, meaning there is a lack of supply for something that is quickly growing in demand. The era of collaboration seems to have arrived. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)