Asia-Pacific Millennials: An Opportunity for the Real Estate Industry
One-fourth of the Asia-Pacific workforce is made up of millennials, representing an estimated $1.1 trillion in buying power by the year 2020, and making the demographic one of the most important consumer bases in the region.
Although millennial diversity is driven by regional cultural differences, there’s a common socio-economic thread that binds them. Most millennials are fully employed in a middle-income job, are single and live with their parents in a household of three to four people, according to a recent survey.
Leaving the Family Home
Half of millennials worldwide live with their parents, while in Asia-Pacific that number is 63 percent. Cultural upbringing is significantly different in Asia-Pacific than in the west, and it does factor in to the higher percentage, but the steep price of residential properties in the region is a larger reason Asia-Pacific millennials tend to live with their parents.
According to the survey, millennials in the Asia-Pacific region intend to stay in the family home for a longer time: 33 percent plan to move out in the next two years, while 18 percent of the respondents had no plans to move.
Two out of every three millennials living on their own in the region live in rented properties. However, the survey found that 65 percent of the respondents aspire to buy their own house in the future. Millennials in India and China showed the highest propensity to buy their own property outright, while those in Japan showed the lowest intentions. In the Asia-Pacific region, home ownership among millennials is just 11 percent, compared to the global figure of 15 percent.
Pricing is a major hindrance to purchasing property and is largely why millennials continue to live at their parents’ homes. In fact, the survey found that the median housing prices were more than 10 times greater than average household income in all 10 tier I cities that were surveyed.
In the key markets that were surveyed: 71 percent agreed that wages are not growing at the same rate as property prices; 63 percent agreed that millennials are forced into renting because buying a property is out of their reach and; 57 percent agreed that they could purchase or rent their own property with financial support from parents, relatives or friends.
Another important aspect of millennials in the region is their reluctance to compromise on quality of life to buy a property: 64 percent believed that buying a property would mean compromising on lifestyle, 58 percent agreed that to purchase a property now would mean compromising on the location and 51 percent said that people of their age would rather invest in quality of life than invest in a property.
However, most millennials in Asia-Pacific would like to buy their own homes without compromising on quality, size, location and quality of life. Affordability, along with innovative financial propositions, amenities and accessibility can convince millennials to purchase their own homes, the survey said.