RENTAL MARKET: ITS NOT WHAT IT USED TO BE
Perhaps the single biggest phenomenon in the residential property market today is the number of millennials who turn their noses up at purchasing property. A combination of economic recession and a shift in priorities have led this mobile generation to be just that.
‘Your thirties are the new twenties’ is the rousing call as they opt to delay marriage and starting a family for a later date. In the United States, home ownership has hit a thirty-year low; mostly due to the (now) standard practice of enrolling at a college as far away from home as possible. The mindset is one of constant mobility and a longing to move where the best lifestyle and employment opportunities present themselves.
In South Africa, the burgeoning rental market is due to a set of slightly different, yet all too relevant factors. There is a perception that one must bite the bullet and live in a bustling metro for a decade; lining your pockets whilst establishing yourself in your chosen career path. Coastal locals move to inland cities with the clear intention of returning home to raise their unborn children there. They view the schooling and surroundings as being superior in a somewhat biased rush of nostalgia.
The political and economic uncertainty that South Africa faces has also led many to keep one eye open on any and all emigration opportunities that are deemed worthwhile. The path seems to be one of tertiary education, a decade of tentative rentals and eventual bond applications in a suitably safe location.
Does this spell the end of the property market? Hardly. If anything, it has reinvigorated the ‘buy to rent’ market and led many a retiree to begin their ‘second career’ as a landlord to multiple properties.
The game has transformed but investors with the necessary foresight will find a way to make their property portfolio work for them in these everchanging times.