7 October 2015 - Who are Millennials? When we talking about ‘Millennial generation’ or ‘Generation Y’, we usually mean the people born between the Early 80s to Early 2000s. The Millennials as a generation have a set of defining values and characteristics, but one of them that is particularly striking is the tendency for Millennials to depart from the shelter of their family homes at a later age than previous generations – and when they do move out, they often accomplish this through parents’ financial assistance of down payments and mortgage arrangements.
This article aims to investigate reasons for the emergence of such a trend and present an overview of the obstacles holding back the desire of the Millennial generation to buy a property of their own. The following information is gathered through studies conducted by: The City University of Hong Kong, Clark University, and Brigham Young University, as well as the White House’s Report on Millennials and various news articles.
The Millennial generation were significantly affected in 2008’s financial tsunami. With a large proportion of these individuals around college age or having just graduated around the time, the recession left them facing challenging times, with substantially fewer available job opportunities. In 2010, the unemployment rate for young workers between the ages of 18 to 34 peaked at just over 13% in the United States alone. The tsunami’s effect on the unemployment rate was felt worldwide, with Millennials all over the planet reeling from the impact and starting their careers on the back foot as a result.
The financial crisis is by no means the only economic factor that contributed to the Millennials’ financial predicament. There has been an upward trend of educational attainment across generations, with more people attending college and university than ever before. Whilst this may seem to be a boon to Millennials, it is important to bear in mind that education has become increasingly expensive. The cost of education is notably pronounced in the United States, where the average student loan debt for fresh graduates from US public and non-profit colleges in 2013 stood at US$28,400. Moreover, 7 out of 10 fresh graduates from observed schools graduated with debt. Whilst it is true that a college education opens many doors, thousands of students are now graduating with debt that at best is burdensome, but also crippling in many cases.
Secondly, with an influx of degree holders in the workforce, the value of a degree has also become slightly diluted. Combined with the effects of the financial crisis, this has resulted in the job market becoming very competitive for Millennials. An article published in the South China Morning Post supported this predicament, highlighting the fact that “fewer Hong Kong youngsters with degrees land middle-class jobs, while more work as clerks”. Figures stated that only 73.4% of university graduates managed to obtain a “middle-class” position, which the article defines as being a “manager, administrator, professional and associate professional”, compared to 82.5% in 2001.
Lastly, property prices are also huge barriers of entry, with Hong Kong Millennials feeling this acutely. According to a City University of Hong Kong Paper titled, “‘I Am NOT Leaving Home’: Post-80s’ Housing Attitudes and Aspirations in Hong Kong”, while mortgage payments in Hong Kong might be considered relatively cheap, buying a property requires a down payment which amounts to a proportion of the property’s purchase price and is set at “30% for small/middle-sized housing and 40 to 50% for larger sized housing or villas”. These ratios were set by the HKMA with the intention to cool local property prices, and while they may not appear too debilitating, when one takes into account that Hong Kong property price index are among the highest in the world, this is a substantial hurdle for any prospective home buyer, let alone a Millennial.
The aforementioned CityU paper confirms the views held by Millennials about property purchase intentions, with survey results of 1,708 Millennial-aged participants indicating that many are still living with their parents, with 65% stating that they could not live anywhere else. It seems that even when we consider only economic and financial factors, there are clear reasons for the downward trend in Millennials seeking property ownership.
Millennial Social and “Cultural” Traits
The previously mentioned factors are, however, not the only reasons why Millennials, and perhaps Hong Kong Millennials in particular, aren’t too keen on buying property. Generation Y are not solely characterized by their economic predicament, but also by their social predispositions which have formed to become “a culture of sorts” for the generation. The most relevant aspect of this “culture” is that Millennials value a different conception of adulthood than the generations before them. Gone are the days where attaining adulthood is associated with marrying and moving into your own house together.
Nowadays, Millennials see adulthood as the attaining of more intangible goods and qualities. In a poll conducted by Clark University in 2013, the strongest indicator marking the transition to adulthood for both parents and their 18-29 year old adult children is: “accepting responsibility for the consequences of your actions and mistakes”. 36% of the young adults and 50% of the parents surveyed agreed that responsibility was the most important indicator of adulthood, whilst none of the young adults surveyed and only 5% of their parents agreed that moving out of the parents’ house was vital in attaining adulthood.
So if adulthood and buying a property are no longer synonymous, then what would compel a Millennial adult to commit to home ownership? Referring back to the CityU survey, marriage and moving in with a partner seems to be what spurs Millennials to move out of their parents’ homes. 79% of respondents to the paper’s surveys indicated that they would move out of their parents’ homes once they got married or got a partner.
That being said, marriage appears to have taken a backseat for Millennials, with the same Clark University poll indicating only 4% of emerging adults considered marriage as a part of the various rite of passages one has to undertake to achieve adulthood. This changing attitude has led to people getting married later and later than before. When attempting to understand why this is the case, it is worth noting that Millennials are characteristically individualistic. As endorsers of individualism, Millennials are predisposed to devote time to establish and enrich themselves. They are inclined to firmly develop who they are as individuals and build a solid career and financial base prior to seeking out someone to settle down with.
Hong Kong Millennials appear to take this individualism one step further with 90% of respondents to the CityU survey having never considered sharing a flat with friends and 85% of them agreeing to the statement that Chinese people should preserve family ties, indicating that part of the reason why they are still staying at home with their parents is a cognizant, coherent choice. This differs from Western Millennials who are more inviting of the prospect of rooming together with someone until they are financially independent enough to buy their own property. The paper noted that these attitudes resulted in Generation Y in Hong Kong being relatively sheltered from the experience of living with someone else, resulting in weaker ties to social networks compared with their Western counterparts. This inexperience might not bode well when looking for a suitable partner for marriage, and their reluctance to share living costs with their friends via flat sharing may be a further reason why HK Millennials do not place too much emphasis on buying their own home.
Conclusion?
