Next year we will enter the 2020’s and as the local housing market starts to emerge from the its current volatility, population demographics I suggest will have renewed focus.
One important group will be Millennials, that is those (generally) born between 1975 and 1995, their attitude to work, business, housing and a wide range of social issues will help define the 2020s and the outlook appears very different from the 1920s.
The median age of the Australian population has increased by 3 years over the last two decades, from 34 years 1996 to 37 years in 2016. With an age range of 24 years to 44 years Millennials sit well within this media band and so represent a critical part of the housing market demographic.
Not the Roaring 20’s
The 1920’s in the United States in particular were called the roaring 20’s as a time of exuberant freewheeling that’s often defined by a rejection of many traditional moral standards and famously prohibition. By comparison, how very different the 2020’s look!
As we enter the 2020’s how are Millennials viewing the future and how might their attitudes impact the future shape of the housing market?
Every generation comes with a unique set of behaviours and presents a unique set of challenges. For the last decade brands of every kind, and that would include related brands around finance, technology and housing have looked to engage Millennials as their spending power has grown.
With this generation now past teenage years, however, and shifting their focus more towards their long-term futures, it’s a valuable exercise to explore their priorities and how this could influence the housing market.
One starting point is how Millennials view business as I think here we see some attitudes that will influence housing and investment choices.
The Deloitte Millennial Survey 2018, from an Australian perspective asks are Millennials losing faith in business?
In part the answer is ‘yes’; ‘Australian Millennials remain uneasy about the future: worried about terrorism, robots taking their jobs, and unemployment generally, and they have little confidence in the ability of business or politicians to help them.’
Climate change, unemployment and income inequality are the top concerns of Australian Millennials. Their personal priorities are generally summarised as health, career and housing.
The Deloitte’s survey goes onto reveal some key themes:
Firstly, perceptions of business are declining with their opinion of business’ motivation and ethics are at its lowest level in four years and less than half (45%) of Millennials believe business has a positive impact on society, down from 72% in 2017.
Two thirds believe political leaders are having a negative impact on society, and over a third of Millennials believe they will better off than their parents but, only 35% believe they will be happier.
The relationship between Millennials and their parents is already playing out as inter-generation help with the purchase of a home is already a key factor in the housing market and one that looks set to continue.
Career is important, and flexibility and a positive work culture are key to Millennials. Gen Z loyalty to employers is lower than Millennials, with 59% saying they would expect to stay with their current employer for less than two years.
According to the Deloitte survey young workers feel unprepared for the changing nature of work. That includes technologies and impact from robotics and the internet of things to artificial intelligence and cognitive, and Millennials have mixed feelings about this
Among Millennials 45% believed that these technologies would augment their job, allowing them to focus on more creative, human and value adding work.
Attitudes to career are important to the housing market, as stable and productive employment are keys to obtaining finance and that in-turn helps give Millennials the level of security they need to commit to buying a home or an investment property. Bank lending for a home loan is also tied to employment stability and security.
The Impact of Immigration
The structure and growth of our population has always been heavily influenced by immigration. Australia’s recent population growth rate (1.6%) adds some 364,800 people each year! Net overseas migration accounts for more than half (58%) of this growth, while the remaining 42% is accredited to natural increase.
According to Roy Morgan the impact of migration has also had a big impact on Millennials. To this perspective there’s a challenge to the idea that Millennials are experience seeking, travel loving, commitment avoiding mortgage dodgers who value and place lifestyle above all else and invented the concept of the “bank of mum and dad”.
In part this looks true particularly the love of travel, and until now avoiding mortgages. However, according to Roy Morgan the big impact of immigration on this generation, which has defined them like no other before.
In Sydney and Melbourne close to one in three Millennials (31%) were born in Asia. So, a very large proportion of today’s young Australians were born in Asia, particularly those living in Sydney and Melbourne.
Roy Morgan data reveals that Asian-born Millennials are very different to their Australian-born peers when it comes to their mindset. Asian-born Millennials are much more likely to hold socially conservative views and values despite their youth.
Although the Deloitte’s survey reference to business and politics does reinforce this. Being more conservative may well influence their caution when it comes to investing in a home and making an entire raft of financial choices.
There are also some of the big generational trends that have defined their Australian-born generational counterparts. Such as marriage and that’s very much connected to the demand trends in housing. Four in 10 Australian-born Millennials are married (44%), compared to more than seven in 10 Asian-born Millennials (74%) across the country.
Millennials born in India are even more likely to be married – 86% are married, almost double the Australian-born rate. Roy Morgan also notes that they are also more likely to have kids – six in 10 have kids under 16 at home, compared to 55% among Australian-born.
When it comes to house and home, close to one in five Millennials from China own their home outright, compared to one in eight Australian-born Millennials. Family size and structures are here an important impact on the housing market and can involve mixed generations.
Triple the percentage of Asian-born Millennials believe that traditional gender roles should be upheld in the home: 15% believe women should just run the home, compared to just 4% of their Australian born.
As noted earlier career is important to Millennials, which directly relates to potential earning capacity and ability to buy a home. While Australians in general are becoming more educated, those from Asia are well ahead: less than half of Australian-born Millennials have a degree compared to 74% of Asian-born Millennials.
There are many Asian-born Millennials quietly building a fairly conservative life, who share more in common with the average Baby Boomer when it comes to mindset and values.
The future outlook for owning the ‘Australian-Dream’ could well be a little different when we take account of many of the changes highlighted in these two reports surrounding Millennials as a key demographic in 2020.