As our future buyers and tenants – as well as the next generation of property investors and landlords – it’s important we know where millennials are moving to and why.
Most millennials fall firmly into the first-home buyer camp, where they face tricky property market conditions and an unshakeable association with pricey avocado toast. They benefit, however, from some substantial incentives from the government to help them buy their first home. For example:
KiwiBuild - KiwiBuild homes are for aspiring first home buyers who are currently locked out of the market. To qualify you must be be a New Zealand permanent resident or citizen, or ordinarily resident, intend to live in the home for a minimum of three years, and have a household income of no more than $120,000 ($180,000 if you are buying as a couple).
KiwiSaver - If you're a first-time buyer and you've been making regular KiwiSaver contributions for at least 3 years, you may be able to apply for a KiwiSaver HomeStart grant through Housing New Zealand. If you buy an existing home, you can get $1000 for each year you’ve paid into the scheme. The most you can get is $5000 for 5 years.
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Turning lacklustre suburbs into vibrant neighbourhoods
Millennials have a knack for gravitating towards promising, up-and-coming areas that lend themselves to growth and gentrification. Once millennials move into an area it usually doesn’t take long for previously lacklustre suburbs to transform into buzzier, more vibrant places – in other words, good places to invest in.
The biggest pull for millennials to certain areas is affordability. The majority of millennials looking to get on the property ladder in New Zealand face serious affordability issues, so they’re primarily looking in areas where they can afford to buy a property using the government incentives available to them.
Consequently, they tend to widen their property search out to outer suburbs, where on the whole properties are cheaper. New development areas are also seeing a boom in millennial population.
As well as affordability, lifestyle is another important factor, with most millennials wanting to live within a reasonable distance of the city centre. Good transport links, convenience and having decent amenities within easy reach also factor highly.
Playing the long game
Open-minded and willing to take a few chances, many millennials are savvy at identifying a good sister suburb. They recognise that while it might not be exactly where they want to live, the cheaper living costs a sister suburb can offer – alongside the fact that they’re still able to remain close to the CBD – makes them a very worthy option.
Millennials choosing to live where they buy often do so knowing that although it’s their first home, it isn’t necessarily their forever home.
Rent-vesting
Another savvy route millennials are taking is rent-vesting. Buying an investment property in an outer growth suburb, renting it out and using the rental income to cover the cost of living elsewhere is allowing many millennials entering the property market to still live where they really want to be.
They’re on the property ladder and building equity, while also getting to live somewhere that ticks their boxes when it comes to lifestyle and close proximity to the city: win-win.
Whichever route they decide take, it’s well worth keeping an eye on millennials’ chosen hotspots and property trends because when the time comes for us to downsize, they’ll well and truly be on the up.
