Follow the (older) money…
There’s a lot being said at the moment about what sort of homes Millennial and Gen-Z home buyers want and are likely to want in the future, but the real estate industry should not write off Gen-X and ‘Boomer buyers just yet, says Rudi Botha, CEO of BetterBond, SA’s biggest bond originator.
“Baby Boomers are those potential buyers born roughly between 1946 and 1964, which means that the youngest of them are currently 54 or 55 and the oldest around 72. In previous years, this would have suggested that most were just about ready to sell off their family homes and move to a relatively inexpensive cottage in a retirement village or a bungalow by the sea.
“But our latest statistics* show that people over the age of 60 are in fact the biggest spenders in the property market currently, with the average home price paid by this age bracket being R1,77m – which is 4% more than it was at this time last year, and more than double the average paid by people in their 20s (R842 000).
“This is probably because people are generally living longer now and many are not retiring until well into their 70s – or at all – so even if they do downsize to a more secure, more manageable property, it is often in a better location and more luxurious than their family home was.”
Meanwhile Generation-X buyers are those people born between 1965 and about 1982, which makes the youngest of them around 36 or 37 this year and the oldest 53. “In other words,” says Botha, “they are predominantly in their 40s now and generally well-established in their careers, and they often have children who are still at school or studying.
“The average home price currently being paid by this cohort is R1,3m, which is 4,9% higher than it was at this time last year and, like the ‘Boomers, they are generally not buying for the first time. This means that they are often able to put down a substantial deposit derived from the sale of their previous home.”
Indeed, he notes, the BetterBond statistics show that the average deposit paid by buyers aged 40 to 50 in the past 12 months was R262 000, while that paid by the over-60s was R720 000.
“This is important knowledge for home sellers, because buyers with a significant deposit are more likely to qualify for a home loan and thus more likely to go through with a home purchase than buyers who don’t have as much money to put down. They are thus a much less risky proposition for sellers.
“In addition, ‘Boomers and Gen-X buyers clearly have considerable spending power, and sellers with suitable homes may be able to increase their chances of a quick sale by ensuring that their property marketing specifically targets one of these groups and emphasises any features they might prefer.”
Botha says several studies have shown, for example, that ‘Boomers generally want their homes to reflect their personal and career successes – or that they have really “arrived” at the point where they can afford a home with features and fixtures that would have been regarded by their parents as luxuries. “This is why affluent ‘Boomers are known for buying “jewelbox” homes – small properties packed with opulence – and why they are an excellent target market for those selling upmarket apartments, townhouses and cluster homes in blue-chip suburbs.
“Features especially high on the wish-lists of these buyers are state-of-the-art kitchens, separate dressing rooms, hobby studios, home offices and elegant indoor and outdoor entertainment spaces, preferably with a view.”
On the other hand, he says, busy Gen-X buyers are known to be big on informality combined with sleek modern finishes for ease of maintenance, and technologies that improve efficiency. Their favourite features include large open-plan living areas or “great rooms” where the members of their family can simultaneously participate in multiple activities such as cooking, dining and schoolwork, and Smart home automation systems.
*BetterBond currently accounts for 25% of new mortgage bonds registered in the Deeds Office annually and its statistics are thus a reliable indicator of the state of South Africa’s residential property market.