Weekend Argus (Saturday Edition)
Generation X’s silent property revolution
Step aside millennials and baby boomers, buyers aged 40 to 50 are now shaping the market
SO MUCH in today’s world revolves around the desires and needs of social media-driven millenials.
They are generally regarded as the movers and shakers in commerce – those who earn the big bucks with their mobile app developments and technology-centred businesses.
They also tend to be more self-entitled and demanding (sorry millennials), to the extent that businesses cater services and products specifically for them.
This is seen in almost all spheres of business, including the property sector. What types of homes do millennials want? Which areas do they prefer? How can the sector develop properties that will appeal to them?
It is such a focus that, apart from retirees, the baby boomers, often seem to be the only market taken into proactive consideration when talking and thinking property.
Despite this fixation on the movements of millennials and the baby boomers, it is actually another generation of South Africans who are really moving on the property ladder – Generation X.
It is this generation, born typically from the mid-1960s to the late 1970s, and renowned for working and playing hard, who are adding rungs to their climb and notching up their second and even third properties.
The statistics tell the story, with 25% of all home loan applications last year to mortgage originator BetterLife Home Loans – a total of 79 328 applications – received from buyers between the ages of 40 and 50. These South Africans account for a small percentage of first-time buyers, says BetterLife CEO Shaun Rademeyer, and are usually buying homes for a second or third time.
At the end of April, the average deposit provided by this age group was in the region of 24%, he says.
“These deposits are sourced from savings and proceeds and/ or profit made from the sale of existing properties. This age group has, in all likelihood, been working for well over 20 years. If they have followed sound financial practices, it is likely they have saved for this event in their lives.”
Nationally, Rademeyer says, the average purchase price for this age group ending April last year was R1.182 million, and R1.249m at the end of April this year. This growth in property inflation is roughly 5% year-on-year.
“The approval rate for these buyers is likely to be the highest of all age groups.
“This age group would have already established credit facilities and, if their affairs have been conducted in a proper manner, their ratings with credit bureaus and financial institutions would be favourable,” he says.
From luxury Paarl to affordable Pelican Park, it is Generation X buying not only the high-end homes, but also the affordable homes.
In the Western Cape, this generation of buyers want family homes in the suburbs of Cape Town, says Greeff Properties CEO Mike Greeff, adding that they buy prop- erties close to schools as many have school-going children.
“Some are looking for homes with granny flats or cottages to house ageing parents. These people are also what we refer to as the ‘sandwich’ generation as they’re caught in the middle of two generations requiring their care.”
Cape property developer and architect Michael Fenner-Solomon, of Latitude Developers, finds that 50% of their clients fall into the 40to 50-year-old demographic. People nearing 50 are also scaling down to more manageable home and ground sizes, possibly 15 years earlier than one would have seen in the past.
He says buyers in the Western Cape predominantly opt to purchase homes in the more affluent south- ern suburbs, although some do buy in the upper-end lifestyle estates in and around Paarl, Stellenbosch and Somerset West.
“Not many go to the Atlantic Seaboard as it is too crowded and expensive,” he says.
“Even though wealthy, they want to keep their overheads to a minimum, so no expensive under-floor heating, but water-saving devices and storage are essential.”
Although many buyers in this market have sold previous properties to buy new ones, perhaps to downsize, some are looking for second properties as investments or holiday homes, says Harcourts South Africa CEO Richard Gray.
Others are moving to new properties following relocation.
Gray says Generation X buyers who do buy their first properties at this age have many reasons for waiting to buy.
“We see professionals who were focused on building their careers before settling down, or an avoidance to be tied down to extensive travelling. Affordability is also a factor as first-time buyers in this demographic waited to be financially secure before committing to a large investment.”
Of course there are also a great number of South Africans in this age group who have not been able to afford to buy their own homes, but are now able to do so because of the growing number of affordable housing developments throughout the country.
Statistics from Lightstone Property Solutions reveal that, due to affordable housing, the top 10 suburbs in the country for Generation X buyers are in Johannesburg, Cape Town, Tshwane and Rustenberg Municipality.
In Cape Town, the suburbs with the highest number of buyers in this age band are Pelican Park (ranked second in the country), Delft (third), Khayelitsha (fourth), and Parklands (fifth). Pelican Park has a significantly higher proportion of first-time home buyers in this age group than other places.
This, says Lightstone analytics director Paul Roux de Kock, is because of the outburst of affordable property developments in some of these areas.