Although the traditional thinking is for singles in Singapore to live with their parents until they get married, there seems to be a growing trend of Singaporean adults under age 35 looking for property to buy or at least rent, in order to move out. And this trend seems to be picking up pace thanks to COVID-19. For many millennials, the desire to move out comes from a variety of factors, including a desire for more privacy and wanting more space for social gatherings.
Considering this, could the millennial market be a lucrative sector that investors have unwittingly neglected?
If you’re someone looking to sell or rent out your property, here are some factors that indicate the millennial market is worth your time.
Millennials are better educated and earn more relative to previous generations
Millennials have purchasing power. In our 2018 poll, 54% of respondents aged between 21 and 36 years old were residential property owners. Of this, 24 percent already had multiple homes.
Research also revealed that millennials are the quickest savers of housing deposits. Millennial homeowners took an average of five years to save for housing deposits, while baby boomers and generation X-ers took six and seven years respectively. This is largely due to Singapore’s population receiving better education with each generation. With better academic qualifications and skills come better income, and better ability to afford the properties you are trying to sell or rent.
Granted, 2019 data found that private property prices have risen 12% while wages have only risen by 7% to 8%, creating concern among millennials about affordability. However, the fact is that the government regulates the property market in Singapore. Things like housing grants and previously introduced property cooling measures are frequently reviewed and adjusted to keep housing affordable for Singaporeans.
Millennials are more financially literate
In the old days, property investment was a big step into the unknown for most people, who could only rely on hearsay, the occasional book, and anecdotal recommendations from those around them.
Today, millennials (the first internet generation) have learned to harness the power of the internet to gain the financial knowledge they need to strike out confidently on their own. Using Google, they seek out online property finance blogs and reference guides to do independent research. Using social media, they also attend or sign up for free webinars to further brush up their awareness.
With increasing financial literacy comes increased confidence to make well-informed decisions, purchases and investments—leading to increased demand that you, as a landlord or seller, could capitalise on.
Millennials accustomed to smaller property sizes
Whether public or private, modern developments in Singapore are seeing shrinking home floor areas. This is a phenomenon that earlier generations may find difficult to get used to.
On the other hand, data from Business Insider generally show that millennials don’t mind smaller houses. Part of the reason lies in the kind of lifestyle millennials lead. Millennials tend to spend more time out of home, with more social activities taking place in public spaces, coupled with the option of travelling to counter any cabin fever. At the root of this is the higher spending power mentioned earlier. With the ability and money to find mental space outside of home, millennials don’t need such large spaces at home to feel comfortable.
Another reason is the lower price point and easier maintenance of smaller spaces. Given that millennials prefer to spend on experiences rather than physical possessions, this reason doesn’t only save money and time, but actually frees them up to be used in more worthwhile pursuits.
Although a small space is ultimately more confined, even this might not be an issue to millennials, as they also tend to be more creative in maximising the available space they have and even in creating a sense of greater space, as the houses featured in Channel Newsasia’s Making Room series show.
Although we found many buyers leaning towards larger units during COVID-19, in part due to the desire to have dedicated work-from-home spaces, the trend towards smaller spaces was prevalent prior to the outbreak, and will quite likely resume after the pandemic is over and things are back to “normal”.
Lifestyle is important to millennials
As a generation that has grown up in affluence, millennials’ spending habits and lifestyle preferences are so widely discussed that they have become memes and a part of popular culture—experience over ownership, killing the diamond industry, and so on.
Although some of this is exaggerated, companies, agents and sellers are responding to this by refining their marketing operations to hit this segment where their money is. This desire for lifestyle elements in their property choice rather than just “product specifications” like area, floor and sun direction may also represent an opportunity to anyone else seeking to sell or rent their property.
For example, as they are more likely to purchase a place that “aligns” with their own values and self-image, millennials make it possible to strategically differentiate and price your property based on more intangible “lifestyle” factors such as the character or architecture of a neighbourhood, or its food choices, or its history, instead of just the conventional factors of valuation such as convenience, height, and space.
Millennials: An Opportunity to be Grasped
In conclusion, millennials today have the spending power to invest in property and their preferences can differ from their parents, making them a significant and distinct customer segment to be reckoned with in the Singaporean’s property market.
According to the CBRE’s report on Asia Pacific Millennials:Shaping the future of real estate , millennials make up 25% of the working population in Asia Pacific. To capture this emerging spending class of buyers, you should learn more about their likes and dislikes, and how to present your property in ways that will appeal to them. The opportunity awaits—will you take advantage of it?
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