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Millennials in Real Estate: Trends, Challenges, and Future Outlook

By Andrew Bell

Issue 38 | Thursday 13 June 2024 | Millennials in Real Estate: Trends, Challenges, and Future Outlook

Hi, I’m Andrew Bell. While I am always keen to provide you with updates on events impacting the real estate market month to month, there are also significant underlying trends that anyone interested in real estate should be aware of.

One of these trends is the changing composition of buyer groups within the marketplace. As many of us know, baby boomers have had a substantial impact on our economy throughout their lives. However, as some transition into retirement and others move on, millennials are beginning to exert their influence over the market. Born between 1981 and 1996, millennials are now aged between 28 and 43. There are over 5.84 million millennials in Australia, and with immigration, this number is expected to grow by over 100,000 per year over the next five years. This makes them the second-largest age-related growth factor after baby boomers for the rest of this decade. Millennials have distinct housing preferences shaped by economic factors, lifestyle choices, and social trends, with flexibility and mobility being significant drivers.

Interestingly, many millennials prioritise renting over homeownership, valuing the freedom to relocate for career opportunities or lifestyle changes. They seek rental properties that offer convenience, affordability, and proximity to urban amenities such as transportation, hospitality, and entertainment venues. Despite the desire for homeownership among some millennials, affordability remains a significant challenge due to rising property values and financial pressures. Consequently, many continue to rent.

When millennials do buy, their priorities often include energy efficiency, sustainability, and technological integration. They prefer walkable neighbourhoods, bike lanes, and access to green spaces, placing great value on community and social connectivity. This generation favours housing that facilitates social interaction through shared amenities like co-working spaces, communal gardens, and organised events within residential communities. Their emphasis on social engagement reflects their desire for connection and belonging in an increasingly digital world.

For property owners looking to attract millennial buyers, it is essential to understand their preferences. Developers and policymakers must also keep these factors in mind to ensure new properties meet the demands of this prominent group that will influence real estate trends for years to come.

As we approach the end of the financial year, it’s clear that the real estate market remains strong. However, there are signs that continued price growth may be constrained by the fact that borrowing capacity is tied to incomes, which have not been rising as quickly as property values. While we expect price growth above inflation, more moderate growth would be healthier moving forward.

According to warnings from the Reserve Bank and careful analysis by leading economists, high interest rates are likely to persist through to the end of next year. There is also a continued risk of another interest rate rise unless the persistent components of inflation start to decline.

With everything happening in our world, it’s easy to feel unsettled. However, it’s important to remember that, contextually, we are among the luckiest people on the planet here in Australia, particularly on the Gold Coast. Despite our concerns about various global developments, we should appreciate living in such a wonderful part of the world.

I’ll be back with you in another fortnight.

Warm Regards,

Andrew Bell, OAM
The Ray White Surfers Paradise Group


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