The newest generation of young adults, Gen Z (born between the mid-1990s and early 2000s), is redefining the market with their distinct values and preferences.
International reports describe this prized generation as ‘digital natives’ who are socially and ethically responsible. They resonate with authentic and transparent brands and are value-conscious with 83% expressing their interest in thrifting (Ultimatethrifting.com).
With the oldest Gen Z now aged 27, this generation is also profoundly impacting homebuying around the glove. According to a Redfin study, Gen Z’s have a strong affinity for homeownership, tracking ahead of Millennials and Gen X despite their strong need to create experiences over purchasing material items.
Back home, ooba Home Loan’s Q2 ’24 data cited a 30% increase in the purchase price paid by buyers aged 18 – 25 over the past five years. The data highlighted this age category as the second largest age group (9.2%) to purchase an investment property in that same quarter.
And despite their affordability challenges in a tough economic climate, there is strong evidence to suggest that when this generation can buy, they will actively seek fixer-uppers, sectional title properties and properties that they can purchase with friends, family or a partner.
Can this generation realistically afford to buy?
Compared to previous generations, Gen Z is delaying homeownership, with many choosing to live with their family during their first few years of employment to save up enough money to purchase their first property. The rising cost of living in South Africa has also resulted in many choosing to rent rather than buy for the foreseeable future as costs associated with buying a home remain a barrier to entry.
However, with two recent interest rate cuts under South Africa’s belt and more to follow, we expect this generation to find new ways to enter the property market locally, and I strongly believe that many of them will be saving up for a property, splitting the costs (co-buying) or applying for a 100% bond shortly.
They also recognise that property values in certain parts of the country are more affordable than ever, and this savvy generation will be thinking of exercising their buying power accordingly.
What they really, really want
Gen Zs are very deliberate in their property strategy and have clear homebuying preferences.
When it comes to location, data by ooba Home Loans shows strong demand by first-time homebuyers for properties in the Western Cape, despite their hefty price tag. In addition, anecdotal evidence suggests that many are buying in Johannesburg due to low prices and the region’s positioning as the country’s economic hub.
Other homebuying preferences include:
- Lock-up-and-go: The majority of young buyers don’t want to be responsible for the maintenance (and higher costs) required when purchasing a large freehold home and instead prefer a sectional title. These units are easier to rent out, which is often a key part of the Gen Z property strategy.
- Mixed-use developments/ repurposed urban spaces: For Gen Zs it’s all about the ‘live-work-play’ lifestyle. Mixed-use developments typically include a variety of amenities such as restaurants, shops and entertainment options, all within a convenient walking distance. Units within these developments are often more affordable and offer greater opportunities for socialisation, which is important to Gen Z buyers.
- Sustainability-focused: Gen Zs are environmentally conscious and financially savvy, and will increasingly be looking to sustainable features in homes such as water tanks, solar panels, energy-efficient appliances and fittings (like light bulbs).
- Shared economy: Many new developments now come fitted with appliances like dishwashers, fridges, washing machines etc – a feature that could really sway a Gen Z buyer.
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Above all else, when Gen Z homebuyers decide to enter the property market, affordability is their number one priority.
