Younger generations rent or stay with parents because they can’t afford to, or don’t want to, purchase property
A key is a traditional 21st birthday gift which symbolises a young adult’s independence, and often their stepping away from the home of mom and dad.
But now adults under the age of 25 are opting to stay put under their parents’ roof. Latest stats show Generation Z is taking longer than their millennial counterparts to start renting or buying their own property.
Stats also show those aged over 40, who in the past would be stepping on the property ladder, are now opting more often to rent rather than buy property. Generation Z’s behaviour has shown a “significant shift” in the age of entry-level tenants, says Michelle Dickens, director of TPN Credit Bureau. Only 7% of those born in the mid-1990s to the early 2000s rent their homes, compared to 11% of millennials who rented at the same age.
“Property ownership distribution also shows half the number of Generation Zs, compared to the number of millennials at the same age, own property.”
TPN research also shows that millennials, now in their 20s and early 30s, continue to make up the biggest demographic of tenants in South Africa. Stats SA reports that young graduates have an unemployment rate twice as high as their adult counterparts.
Millennials have been taking longer to settle into secure jobs than previous generations, with many freelancing or job-hopping out of necessity.
“Generation Z also have little choice but to stay with their parents until they have an income.”
FNB stats show the average age of homebuyers, including first-time and repeat buyers, continues its long-term age-increasing trend. Part of this is perhaps explained by recent weak economic times, says FNB’s John Loos.
He says this limits new job creation and the pace at which young working age people enter the labour and property markets. Furthermore, since the property boom, house prices have been relatively high.
However, Loos suspects there has also been a culture shift as owning property appears to be “old-fashioned”. “Millennials are not thinking about the long term. Today, people live more in restaurants and pubs and ‘home’ is just a place to stay and to sleep.”
Going through the property buying process is just not worth it for them. Older generations want homes they can live in, renovate and alter, but for the younger generations the latest cell phone is more important, Loos says.
“Because home is just a place to sleep, millennials prefer to rent. They also jump jobs more often so if they rent they can easily move from one place to another.”
Another key aspect to the rising age of buyers is possibly South Africa’s ageing middle-class population. Loos says the estimated average age of individual property buyers was 40.69 years at December 2007. By March 2009, this estimate had risen to 43.6 years, and it “never again got back to that late-2007 level. By April this year, the figure was 44.11 years.”
He says younger buyers, on average, are more sensitive to economic and interest rate shocks, so this group waits for better times before buying property. Loos’ data shows that, since 1980, the property buyer population below age 30 has seen its share of total home buying decline from 22.15% to 12.34%. Its most recent share estimate is also significantly down on its 18.12% estimate at the end of 2007.
“The 30 to 39-year-old age cohort declined from a 37.61% high at August 2007 to 29.22% by April this year. It appears possible that the group in its 20s will see its share of total transactions decline even further.”
Co-living happily ever after
Rules for adults living at home
- Make financial contributions towards groceries and running costs.
- Help with daily chores.
- Keep your living areas clean and tidy.
- Work towards independence.
- Respect the house rules, such as being home on time for dinner or giving notice you that won’t be.
Advice for parents
- Set and communicate limits about how long your child can stay.
- Do not pay for all your child’s wants and needs.
- Help your children look for work, but do not do it for them.
- Allow your children space but do not allow them to bully you.
- Do not do everything for them, such as all their washing and ironing.
- Set and stick to ground rules.
- Respect personal and communal space.
- Remember you are family, not roommates.