When the Boomers met their Generation X offspring, their first thought was, ‘this kid is going to have an even better life than we did’. And for the most part, they kept their promise, but the one thing they couldn’t do was control the price of property.
The starter house that they bought in 1974 for R10,000 and sold a while later for R15,000 is still pretty shabby today, and not in the best area, but the price is now into the millions. Steep for a row house behind the suburban train station. Latter-day Generation X’ers would be hard-pressed to buy it. Well, that would be without a boost from the old folks. And this is where many Boomers are having their encore as first-time property owners.
“The buyers aren’t first timers, but the properties are often entry-level homes that they are either buying, or helping their kids to buy,” says Laurie Wener, MD of Pam Golding Properties Western Cape Metro region.
In fact, according to Lightstone statistics, between 50% and 61% of residential properties sold in Rondebosch East and nine other middle-income suburbs go to 18 to 35-year-olds, many of whom are doing it, at least in part, with parental funds. Younger buyers are active in Devil’s Peak, Walmer Estate and Woodstock. Further from the city centre, under-35’s account for 50%, and more, of home sales in Maitland, Lansdowne, Thornton, Crawford and Sybrand Park.
There’s nothing very new about parents buying their kids houses. They have been, since way before the generations started being named, but the big difference is that now it’s not always a matter of choice.
“People are sending their children into tertiary facilities on a massive scale right now. Anything other than an education capped by a degree is death to career hopes in South Africa’s competition-driven job market. So, the kids have to be housed away from home, because universities are fairly thin on the ground and based in big centres,” says Wener.
Whereas in time gone by, the folks would grit their teeth and stump up for ‘res fees‘, now there’s an added complication. There are just not enough rooms for students in official residences, or even private digs – and the fees are prohibitive.
Which has had an interesting outcome. Combined with frustration at uncertain returns from equity market retirement investments, and a need for extra bricks and mortar, late Boomers are opting for second homes to house their student offspring.
“Residential property continues to be one of the most reliable investments and the upside is, when the student kids graduate, there’s a chance to cash out, or keep the house and start charging rent. Meantime, the capital gain has done its bit to maintain the investment value.”
One of the highest incidences of youth/adult buyers is in the Cape Town City Centre. Buyers in this category account for 45% of recent sales, followed by Sea Point at 34%, then Camps Bay at 23% and Bantry Bay at 13%, according to statistics researched by PGP Atlantic Seaboard and City sales manager Basil Moraitis.
What is of interest, is that while young people are marrying later than their parents did, or not marrying at all, the provident teachings of the older generation have resulted in homebuying among the youthful, and parents have to put their money where their mouth is to support their earlier sage advice about property investment.
“The home market has worked for millions of middle-aged and older South Africans who mostly got their houses when the country’s residential property market was one of the most undervalued. The correction, when it came, potentially put a lot of money in home investors’ pockets and their kids have seen the benefits of purchases and sales over the years that have bought their families cars and education. Even with a rising price structure, there was still fat in the sale of a property with room for another buy.”
“Now, the younger generation is scrabbling to buy property so they can get a stake in the market that’s fast gaining values that could put first-timers out of the running. It’s good to see the basics of economic survival are being serviced,” says Wener.
This article “Buying A House For Generation X Takes On A New Meaning For Boomers” was issued by Pam Golding Properties.