RECESSION RESHAPING CONSUMERS

The next generation of home buyers are more savvy than their parents were

THE PAST few years have been extremely interesting and have irrevocably changed the property market, according to Adrian Goslett, chief executive of RE/MAX of Southern Africa.  “The housing crisis experienced at the end of 2008 changed the dynamic of the real estate environment and has affected most people in some way – and not all the effects have been negative.

“As a result of the recession, the current generation of home buyers has become increasingly more knowledgeable about home ownership.  This is partly because property ownership and access to finance requires more preparation and planning, along with the increased media coverage of property topics that home buyers have been exposed to over the past six years.

“Younger consumers believe that the recession has made them more knowledgeable about the property market than their parents were at the same age.  The increased amount of information about property and easier access to the information through the internet has led to many consumers doing their homework more thoroughly before making one of the biggest investments of their lives,” says Goslett.

“Most consumers aged between 18 and 35 still believe that home ownership is a key indicator of success and are willing to do what it takes to be able to buy their own homes.  Statistics suggest that 75 percent of consumers in this age group value home ownership more highly than taking an extravagant holiday or owning an expensive car. 

“Although the stringent lending criteria of financial institutions have made buying property more challenging now than during the property boom period, many potential first time buyers are eager to do the necessary research and save the required deposits, even if this means a change of lifestyle.”

Adults between the ages of 31 and 45 who are generally well established in their careers are the most active and driving the real estate market.  However; Goslett says adults younger than 30 make up a much larger generation and have already made their presence felt in the market.  Statistically the population in South Africa shows that there were 18.74 million births between 1965 and 1985, and about 28.4 million consumers in the under-30 group.

Goslett says the larger generation will mean the demand for property will steadily increase as these young people come of age to buy their first properties.  However, considering that the average age of a first-time buyer is in the mid-thirties and the oldest citizens born between 1985 and 2010 are now only 27, it could take some time before this generation reaches its full economic potential.

“The Great Depression shaped the lives of the Greatest Generation, while the oil crisis during the 1970s affected the Baby Boomers.  Generation X and Generation Y are now leading the property market after the largest modern-day housing recession we have seen.  It seems that every generation has faced certain economic circumstances that have changed their collective perspective in some way.  Today’s generations believe that the risks, details and rewards of buying property are integral to their planning for future financial success,” Goslett says.