MILLENNIALS are changing the world, just not quite the way we think.
In December 2015, CBRE Research conducted a global survey of 13,000 young adults aged between 22 and 29 to examine how they live, work and play, and what this means for real estate.
The findings were used to produce the Asia Pacific Millennials Survey covering 5,000 respondents in Australia, China, Hong Kong, India and Japan (1,000 respondents in each market). The survey also explored differences between millennials of different gender, employment status, marital status, education and income.
The report suggested that while the Asia Pacific millennials are framing new regional lifestyle trends, they still shared similar long-term lifestyle priorities with other generations.
More commonly refer to as Generation Y, here are the seven things that you should know about the millennials.
1. More millennials than ever before are still living at home
At a time in their lives when most young adults are striving for greater freedom and independence, around half of millennials globally still live in the family home.
This phenomenon is even more prevalent in Asia Pacific, where almost two-thirds of the region’s young adults are still living with their parents.
This is largely due to cultural practices in Asia, where parents usually house their sons and daughters until they get married.
The high cost of residential property in many markets is also a factor. Hong Kong and India have the highest proportion of millennials still living at home, while Australia registered the lowest.
2. Most won’t be leaving the nest anytime soon
The survey found Asia Pacific millennials intend to remain in the family home for longer, with just 33% planning to move out within the next two years. 18% of respondents have no plans to move out at all.
In Hong Kong, housing affordability is a key factor preventing millennials from leaving home, while in Japan, many millennials born in the “lost decade” following the collapse of the asset price bubble in 1991 remain reluctant to leave the nest.
3. “Generation Rent” would still like to buy property
There is a common perception that millennials prefer to rent property because they are reluctant to take on the responsibility and commitment of home ownership.
While two out of three Asia Pacific millennials living on their own are renting a property, the survey found that many in fact aspire to own their own home, with 65% of respondents planning to buy property in the future. Those who are still living at home and plan to move out in the future also retain a strong desire to buy their own property.
4. High property prices are precluding home ownership
The financial burden of purchasing a property is the major reason behind the high percentage of Asia Pacific millennials still living with their parents.
The rate of home ownership among millennials in the region is just 11%, compared to the global average of 15%. Rates of home ownership among millennials in Hong Kong, India and Japan are even lower, at around 5%.
The excess liquidity pumped into the market following the onset of the Global Financial Crisis (GFC) in 2008 substantially inflated property prices in most parts of the region and lifted housing prices out of the reach of most young adults.
Median housing prices were more than 10 times greater than average household income in all tier I cities in markets covered by the survey. The higher the price multiple to income, the more likely it is for a millennial to continue living at home.
5. Wealth accumulation is a major challenge
Of the millennials intending to buy a home, 40% said they would require financial assistance from their parents or other relatives.
This practice is most common in Hong Kong and China, where buying a home is viewed as a prerequisite for marriage and starting a new family.
Millennials in Japan, who grew up after the property bubble burst in 1991, displayed the least concern over affordability issues, primarily because they see little room for asset appreciation.
6. Quality of life is key
Two-thirds of Asia Pacific millennials agreed with the statement that buying a property means sacrificing elements of their lifestyle, although insights differed across markets. Melbourne, Adelaide and Perth are consistently ranked among the top 10 most livable cities in the world by Economist Intelligence Unit, and generally enable younger generation to enjoy a high quality of life regardless of whether they rent or buy.
In Hong Kong, however, property prices are well beyond the reach of the young, meaning that millennials prefer to spend money on entertainment instead of climbing up the property ladder.
Half of respondents said their contemporaries would rather have a good time than buy a property, with only 16% disagreeing with this statement.
However, most millennials still want to purchase their own property in the future, provided that doing so does not negatively impact their quality of life.
7. Millennials are happy to continue to LIVE in the family home until they have the financial means to live independently
When they do leave home, most have to rent due to high property prices. Nevertheless, most would still like to buy a home, although they are not willing to compromise in terms of quality, size and location, and continue to place the highest importance on their quality of life.
CBRE Research recommends developers and city administrators take heed of these trends by constructing more affordable housing for rent and sale. In response to the difficulty millennials encounter in accumulating capital for down payments, there needs to be innovation in structuring mortgages and home ownership schemes for young first-time homebuyers.
Small, modern and practical units providing good amenities and accessibility would be ideal for millennials.
Visit http://www.cbre.com/ for more informaion.
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