compromises to become owners
Millennials, these young adults born between 1980 and 2000, were often accused of preferring to rent rather than buy because of their fragile financial situation. But, according to a poll by Yougov for Pretto this trend is reversed. Indeed, this generation sees real estate as a safe haven in these uncertain economic and social times. Despite rising interest rates, 40% prefer to buy rather than rent. What are the reasons behind this growing trend? What are the implications for the real estate market?
Millennials prefer buying real estate to renting
The rise in interest rates pushes 40% of French people questioned to prefer buying rather than renting real estate. Moreover, this trend is reinforced by the directions taken in the pension reform. Thus, 56% of 18-34 year olds consider this situation as an additional argument for buying a property.
Moreover, this trend is even more clearly displayed among millennials who are already homeowners. Since 69% prefer owning to renting. In addition, all regions are concerned. But the Paris region is in the lead with 60% of respondents who consider the pension reform as an encouragement to purchase. They are followed by the North-East and the North-West with respectively 57% and 56% of purchase intentions.
Pierre Chapon, co-founder of Pretto, explains that young, elderly French people increasingly see buying real estate as a safe haven. Especially in this context of a significant rise in interest rates and a reduction in their purchasing power since the start of the year.
” THE millennials need reassurance to look to their future with more serenity and stability. And that is precisely what they are looking for by expressing their desire for home ownership, like their elders in the past.” – Pierre Chapon.
Millennials are willing to compromise to become homeowners
The 18-34 year olds actually see their purchasing power and their borrowing capacity diminish. However, they still have the motivation to carry out their real estate purchase project in 2023. However, to achieve this, many are ready to make compromises. Like buying a smaller property or buying in a different city.
Thus, 24% of 18-34 year olds would be ready to buy a smaller property to become an owner in a difficult real estate market. While 38% of Ile-de-France residents would be ready to buy property in another city or region. On the other hand, it is the 18-24 year olds who are the most determined to make concessions.
Investing in an old property to renovate becomes a solution for accessing property
Millennials are ready to take steps towards home ownership despite rising rates. Indeed, 32% of them would be favorable to the acquisition of an old property requiring work. While 13% would opt for an energy-intensive, but less expensive good.
Thus, more than half would consider buying a property requiring energy renovation. This figure even reaches 71% for those who plan to buy in the next 12 months.
Young owners (68%) are also ready to invest in an energy-intensive property to renovate if they can save money. This is also the case for 52% of the tenants questioned. This trend is confirmed in all regions. Thus, it would make it possible to gradually renovate the most energy-intensive dwellings, while offering a gain in purchasing power to young owners. It should be noted that millennials are also encouraged in this process by the knowledge of energy renovation support systems.
Tax schemes to help with energy renovation widely acclaimed by millennials
The survey conducted by Pretto in collaboration with Yougov shows that young French people have a solid knowledge of the tax systems for energy renovations. More than two thirds of them know at least one. And, this figure even rises to 86% for the intentionists. That is to say those who are considering a real estate purchase in the next 12 months.
Obviously, a real estate project for these French people goes hand in hand with a search for budget optimization via tax measures.
At the top of the most popular tax schemes, we find MaPrimeRenov’, known to 36% of those questioned. And, more particularly in the North West where 44% of respondents have heard of it. Launched on January 1, 2020, this system is accessible to all owners and condominiums of housing built for at least 15 years.
In second place, the Energy check is correctly identified by 33% of respondents. Thus, it benefits nearly 5.8 million households. Finally, the Eco-loan at zero rate or eco-PTZ is positioned in third place. This is an interest-free loan of up to €50,000. It is granted without condition of income to owner-occupiers or lessors of a dwelling built for more than 2 years.
Overall, the French have a good knowledge of tax measures in favor of energy renovation. This confirms their interest in this approach, as well as in solutions allowing them to amortize the cost of their real estate purchase.
The study conducted by Yougov for Pretto reveals a new trend among millennials and Generation X. Indeed, more and more of them want to acquire real estate assets. Such as houses or apartments, to invest in their future.
Young people entering the real estate market have very high expectations in terms of quality of life, but are ready to make concessions. Social networks have disrupted the concept of traditional real estate agencies. Buyers are now turning to digital real estate programs such as SeLoger or Digimmo to make their first investment.
As for xennials, they dream of acquiring houses to meet their personal and professional expectations. Faced with these expectations, real estate agencies must rethink their approach to attract a new population of buyers. Thus, they must innovate and adapt their offer to new market requirements.