Even though the perception of Millennials is of a lazy, entitled generation, Kylie Davis thinks that they are a generation to be reckoned with, and will no doubt change the status quo of the real estate and property market.
Why on earth does the real estate industry need to worry about Millennials? I mean, really?! The youngest of the generations are far too slack to be serious property contenders, eating smashed avocado rather than saving for a deposit, living with their parents into their 30s and expecting a company car and CEO perks after just a few weeks of work experience.
There’s nothing Millennials can do to affect real estate, is there?
At the recent Stockdale & Leggo Principal's Retreat, Millennial expert Holly Ransom provided a comprehensive overview into the growing new consumer force that agents are ignoring at their peril.
Ms Ransom has consulted to both the United Nations and the Australian government on the importance of understanding and engaging with the generation, and has been described by Richard Branson as one of his top nine favourite dinner guests.
She highlighted that Millennials are the most educated generation ever and will soon be the dominant force both in Australia and around the world in terms of the proportion of the workforce that they make up and their spending power.
“One in three people around the world is a Millennial and 42 per cent will be in the workforce by 2020, with 75 per cent in the workforce by 2025,” the expert said.
“They currently have $8 trillion globally in income and $10 trillion in spending power. By 2030, there will be a $59 trillion transfer of wealth as evidenced by the fact that their current global share of financial assets is 10 per cent, but by 2030, it will jump to 28 per cent.”
In the Australian real estate industry, where the majority of workers are currently over the age of 40, this could have significant repercussions for both employment and marketing strategies.
Millennials may come late to the type of wealth that will allow them to purchase property, but it will eventually happen and their service expectations are going to be different.
In a generation that will struggle with home ownership until later in life, there are also repercussions for the leasing and rental markets.
“Millennials check 10 sources before purchasing and 78 per cent are more likely to purchase within a rewards program,” Ms Ransom said.
“Millennials really want a relationship, not a transaction.”
A further 84 per cent identified that user-generated content had some impact on their spending, while 83 per cent of Millennials only consume information on their mobiles, completely bypassing the desktop computer.
“As businesses, you need to leverage the words said around you if you want to appeal to this generation. It’s not what you say about yourself,” Ms Ransom said, highlighting the importance of reviews and recommendations with this generation.
Recommendations are also playing a large role in whom Millennials will choose to work for and how they will structure their work.
“There are 4.2 million Millennials in Australia currently and they are becoming the dominant force within the workforce at the same time that jobs are being automated,” Ms Ransom said, adding that by 2022, 42 per cent of jobs are expected to be conducted by robots.
Unlike other generations, Millennials can expect to have 18 careers over their lifetimes. Freelance work and "portfolio careers" will be the norm, creating the challenge for the real estate industry to embrace more flexible methods of working that offer pathways to new challenges and experiences and which also speak to the aspirations of the generation.
“This is the gaming generation,” Ms Ransom said.
“By the time a male child turns 18, he will have spent 10,000 hours gaming. There is an expectation from this that directly translates into how they deal with life — they learn a skill, they play the level, they find the bonus rewards or hidden tools that will help them and, when they’ve mastered it, they move up.”
She said that Millennials are five times more likely to stay in employment where they feel a strong sense of purpose.
“This generation wants to join companies that offer a pathway and will deliver to them transferable skills and encourage them to take on new personal challenges,” she said.
Research from CoreLogic also shows that home ownership is a serious aspiration for Millennials.
Only 34 per cent of Millennials currently own property while 95 per cent are concerned they will not be able to afford to buy a property (or afford to move up to their next property).