Fifteen years ago, Baby Boomers were building sprawling homes in a bid to house their growing broods. Now that they’re kids have long moved out, they’ve realised they no longer need the elaborate four-bedroom, three-bathroom dream homes, complete with the four-bay shed and swimming pool out the back.
The only problem is that Millennials – who are the biggest players on the property market right now – don’t want to buy them.
Where their parents chose to build impossibly-large homes – as was the norm for Baby Boomers, Millennials are instead opting for a more minimalist approach to home ownership, favouring apartments and townhouses.
An article published in The Wall Street Journal highlighted the growing trend in the United States.
“Homes built before 2012 are selling at steep discounts – sometimes almost 50 per cent, and many owners end up selling for less than they paid to build their homes,” Candace Taylor wrote.
“These days, buyers of all ages eschew the large, ornate houses built in those years in favour of smaller, more modern-looking alternatives, and prefer walkable areas to living miles from retail.”
The outdated designs are also proving to be a barrier, with Millennials preferring minimalist, low-maintenance designs and modern appliances, which are not often found in older homes. They also favour property that won’t require a complete overhaul or cost them excessive upkeep fees down the track.
“Design trends have shifted radically in the past decade,” Taylor wrote. “That means a home with crown moldings, ornate details and Mediterranean or Tuscan-style architecture can be a hard sell, while properties with clean lines and open floor plans get snapped up.”
On a local scale, we’re not quite there yet, but Effie Zahos, editor at large at Canstar, believes that it won’t be long before we notice the same as what we’re seeing out of the US.
At the moment, 32% of millennials on the property market are still opting for 3-4 bedroom homes, according to Canstar research. But Zahos believes that this will begin to change to reflect the needs of the Millennial demographic, who are more concerned with maintaining their lifestyle than spending a fortune maintaining or renovating large homes.
“Traditionally, it went that you’d get an education, get engaged, get married, buy the biggest house you could afford, pop out two kids… and there’s life,” Zahos said.
“But things have changed. Nowadays, when people leave university, they leave with a huge debt, which greatly impacts their ability to buy a house. But more than that, they don’t want to. Millennials value travel, they value leisure activities, they value their free time.”
Aside from being riddled with student debt, they also have phone bills and credit card debt which all impact their ability to lend.
“There are so many disruptors that we didn’t have,” Zahos said.
“The family makeup has changed. There’s no longer a need to buy a big house – there’s no desire to. Millennials value leisure time much more – they don’t want to spend their weekends cleaning a four-bedroom home or mowing a big lawn.”
Further than that, Zahos recognised that Millennials are a more environmentally-conscious generation than Boomers, which factors into their property purchasing decisions.
“While once it was a real crowd pleaser to own a big house, now it comes with an element of shame, because we are all aware of the environmental footprint that leaves,” she said.
Her advice to people looking at buying bigger houses? “You need to think about when it comes time to downsize, you may not be able to do that because it won’t appeal to Millennials [or younger demographics], who will more and more lean towards smaller, more manageable properties.”