John McGrath – Millennials' impact on the property market
The latest CoreLogic monthly data shows property values across Australia are rising at their fastest rate since 1989.
There’s no doubt that this is making first home ownership in the big cities harder for millennials.
However, as discussed in our new McGrath Report, the prevalence of working from home is now allowing millennials to reset the boundaries of their property search away from pricey inner city districts to metro or regional suburbia.
Millennials are the first truly mobile generation – they shop online, work online and socialise online. Digital platforms including social media are giving them the ability to connect with information, people and ideas at a pace generations before them never could.
Born between 1980 and 1994, millennials are aged between 27 and 41 years. Also known as Generation Y, they make up the largest proportion of Australia’s population at 22% and account for 35% of the workforce today.
Their mastery of technologies means millennials are increasingly using digital tools to assess the property market. They rely on apps and social media to find everything from properties for sale to financing options.
Goals around property ownership have shifted, too. House prices have increased at a much faster pace during the lives of Gen Ys, but they are also earning more than their parents did.
Affordability has made the Great Australian Dream a challenge but true to form, millennials are finding ways to adapt.
Many are increasingly turning to the Bank of Mum and Dad for help. They are also ‘rentvesting’ – buying an investment property instead of a home first, usually in an affordable outer ring suburb, whilst they continue to live in the inner city.
In recent years, millennials’ ability to fund their first home has also been assisted by generous
government grants and stamp duty concessions in NSW, Victoria, Queensland and the Australian
Capital Territory, which were enhanced during the pandemic to keep young people buying.
Social demographer, Bernard Salt says many young millennial families are joining the VESPA movement (Virus Escapees Seeking Provincial Australia) and moving away from the city centres.
Some are leaving the capital cities altogether for regional areas that not only offer affordable housing but also an escape from traffic and a time-poor, big city lifestyle.
Today’s white-collar workers can live anywhere with reliable broadband and the NBN is expanding their options. Millennials are relishing the chance to genuinely design their own lives, which includes buying a ‘grown-up’ house where they can put down roots long term.
This is giving young millennial families the chance to provide their kids with the same ‘luxuries’ they enjoyed as children, such as big backyards and their own bedrooms.
Latest data reveals that people aged 25-44 years are the second largest age cohort leaving capital cities, behind the 45-64 year olds. There was a net loss of 11,845 people from the capital cities in the March 2021 quarter, the largest quarterly net loss through internal migration on record.
Sydney and Melbourne led the trend and lost a net 4,520 millennials during the quarter. Regional NSW and regional Victoria experienced the largest net gain in millennials.
Millennials’ love for travel is well-documented and no doubt, they will be travelling again ASAP once the border is reopened. But during the pandemic when they couldn’t travel or even go out very much, many young people decided to divert their travel savings into a home deposit instead.
An ING survey of 2,000 Australians shows 59% of millennials converted their travel savings into a home deposit and one in three (32%) are planning to buy in the next two years.
To read more about how millennials are impacting the property market, download the McGrath Report 2022.