Many people’s understanding of Generation Y’s characteristics include those of self-confidence, questionable work ethic, a penchant for instant gratification, impatience and an unwillingness to take on adult responsibilities… in fact the list of negative attributes goes on.
Blogger: Cate Bakos, director, Cate Bakos Property
The reality is that we Gen X’s and Baby Boomers are only just starting to understand some of the values that make Gen Y’s tick, the reasons for those values, and the positives that this generation is delivering.
Firstly, to better understand Generation Y, we need to understand that many Gen Y’s formative years were represented by those years of available credit, high levels of consumer marketing and consumer goods uptake.
They have also been witness to the strains and pressures placed upon their parents and others in the workforce; and in particular they have seen older generations striving for recognition and harnessing a sense of loyalty towards their employers, only to be made redundant when corporations put cost-cutting measures into place. This could be a reason why Gen Y’ers seek a work-life balance and are less likely to compromise their own sense of happiness for an employer.
They are also characterized by a tech savvy ability and an incredible awareness of being able to access information at their fingertips. Combining these exposures and experiences gives us some insight to Gen Y’ers.
So how does this translate into property? Well contrary to popular belief, Gen Y’ers aren’t the loudest voices screaming out about a housing affordability crisis. Granted, Gen Y’ers like the idea of having it all – whether it is an apartment in the inner sought-after areas, or a giant family home which compares with that of their parents…. but they ARE prepared to think creatively when it comes to property.
We could all learn a lot from the ways that Gen Y’ers think about property and for that matter, work-life balance.
With many Gen Y’ers living at home with parents for longer, delaying marriage and children until later, and seeking experiences by travelling earlier, there are vast numbers out there who have sizable savings and happy, balanced lives. Despite government incentives to enter into home ownership, plenty of wised-up Gen Y’ers are buying investment properties as their first purchases.
After all, it makes so much sense from a cashflow and lifestyle point of view. They can buy an investment property and either rent where they would like to live for now (perhaps with flatmates/partner), or they can continue living with their parents (for many this is a desirable situation, particularly if they can enjoy benefits such as lower costs of living, freedom to come and go, less cleaning/cooking workload and more importantly, residing in an established inner area close to transport.)
The benefits of such a decision are numerous. They get a foot-holding in the property market, an opportunity to invest in a stable asset class, the tax benefits that come with a negatively geared property, and most importantly, a purchase which requires less commitment than a home.
The disadvantage of this type of decision is only that they don’t have their “Great Australian Dream”. It’s a decision that we Gen X’ers and Boomers can often not even contemplate… But our reasons are generally emotional and not all that pragmatic at all. Gen Y’ers seem a lot more comfortable (and sensible) with this decision.
What does this mean for Australian property? With time being a sought-after commodity and a subtle shift being evident from the popularity of the mainstream house and land package (aka The Great Australian Dream), we should find continued rental growth and property value increases are enjoyed by the inner, desirable locations where lifestyle, transport and proximity to work is on offer.
Many older investors make the mistake of assuming that the key to capital growth is land. When we focus on what this emerging generation are likely to target, we do need to rethink old logic.
All I can say is don’t underestimate Gen Y’s. They know what they want and they are quickly working out how to get it. And they are making sure they have some fun and learning along the way.