By Peter Chittenden, Managing Director | Residential, Colliers International.
Millennials are part of the generation born between 1982 and 2004 and are often associated with technology and social media. Millennials are already a pretty important part of the Australian population (as they are in other advanced economies) and the trends we see apparent in the group will impact many areas of society, not only the housing market.
Millennials currently make up the largest part of the Australian population with 5.15 million, 22% of the total. They currently represent 31% of the local workforce and will maintain that position looking forward to 2025. Globally, millennials are projected to be 50% of the work force by 2020.
As such an important and diverse demographic there are many factors about millennials that will indirectly and directly influence the housing market. Firstly, their sheer numbers make them important and diversity also sets them apart. Part of this diversity comes from the fact that many are the children of immigrants and this helps create an interesting consumer profile.
Technology is very important to this group, not only creating more tech entrepreneurs, but also influencing what marketing channels they use and this also extends to how they influence their families. The rush to digital media to engage them will only become more important.
This is also a highly-connected generation at a community level; they look for strong community and family connections and this close relationship spills over to influence a bias towards urban living, where they seek active communities, an important point for the housing market. Quality of life is important as is staying close to family and friends while making a positive contribution to their own community.
Qualifications are also important to Millennials, and partly as a result they are living at home longer so that they can concentrate and afford their studies, and that’s having a direct and real impact on the housing market. Often, higher education results in higher incomes which can help make it easier to finance a home in the future, how far off that future might be is a matter of current debate, but it may be a decade.
Future incomes are related to stability of employment, and the health of the employment market and housing are well known attributes. Millennials are sometimes marked as lacking employment loyalty, but there’s evidence that shows they are less volatile then Generation X were at the same age. Younger workers staying longer with their employers which adds to productivity and can also help boost and sustain wage growth, and less job flipping also tends to reduce unemployment, therefore reducing a potential negative in the housing market.
When we look at all of the trends surrounding Millennials for the housing market; it is family and household formation that are the really big-ticket demographic trends. Since the 1950’s the median age of people getting married has steadily increased. Getting married later, and staying home longer and spending more time in education are all compounding delays in household formation.
The result… Millennials are less likely to be homeowners than young adults were in past generations. However, with better education and stable employment prospects this may be more a delay than a never ever factor. Millennials are also set to continue a preference for urban living. The move towards urban living is being encouraged by technology and the strong feeling of community, plus strong job opportunities.
While there may be some hurdles in the housing market, this is a well-equipped, engaged generation with education and technology on their side, but their economic success is important to us all, in particular the ageing baby boomers.