The homes of tomorrow will have to give a concrete answer to the new real estate demand from millennials and generation Z, enhancing the attractive elements starting from the design phase
From the analysis of the sales and rentals made by Tecnocasa, it appears that in the first half of 2022 millennials bought a house in 70.6% of cases, while they chose to rent in the remaining 29.4%
The rent solution is higher among young people living in large cities
“Unlike previous generations, millennials see purchasing a first home not as a choice based on the “security of the asset,” but as a choice devoted to independence. An option, which is minimalist and even though it is a first home that does not correspond to their desires, is not dictated and experienced as ‘the ultimate purchase,’ but only as a first step toward autonomy.”
Dario Cardile, CEO and co-founder of Kaaja, an Italian proptech that has created the first platform that digitizes real estate purchases and sales, illustrates this new approach of young people towards bricks and mortar. He pointed out that millennials prefer, first of all, “to buy houses of design, small size, with small green spaces and working areas” because today’s young people “love the city, while they do not like commuting and living at night. They are also interested in technological solutions associated with energy saving.”
Home: an answer to their needs
Jacopo Palermo, ad of Costim, was of a similar opinion, explaining that young people want a home that can respond to their needs and reflect how they are: inclusive, connected, open, global, and technological. “Technology, in this context, is a keyword because, for the new generations, it represents the ability to connect not only to things but also to people,” said Palermo. “A broader and deeper concept to be concretized and developed needs a new concept of home and the city. A place where people’s well-being coexists with economic profit and smart technologies integrate and support sustainable architectures. A new paradigm of real estate that thinks spaces according to people and, at the same time, develops innovations that can also contribute to the country’s economic growth.”
How and where do today’s millennials live?
The research “The Home of Tomorrow’s Young People” carried out by Scenari Immobiliari in collaboration with Coima, found that about 60 percent of young people aged 20 to 40, who do not live with their families of origin, live in a home they own today. And at least half were able to make the purchase by taking out a mortgage. In addition, 23 percent benefit from home in use by the family, while 20 percent acquired their home through their means and/or with the help of family members. Therefore, the first option is the most popular when choosing between buying or renting, although the rental solution is growing in large cities.
According to Scenari Immobiliari and Coima, the demand for residential rental is, in fact, already detectable by the educational and professional needs in Rome, Milan, and some of the significant national realities. It is substantial in the capitals where the average price of real estate is high enough not to allow purchase due to lack of immediate liquidity for the down payment, while it struggles to emerge in the other regional capitals.
Confirmation also comes from the analysis of purchases, sales, and leases made through the agencies of the Tecnocasa group, which shows that in the first half of 2022, millennials are buying homes in 70.6 percent of cases while choosing to rent in the remaining 29.4 percent. This trend is in line with previous years. In 2021, millennials who had bought homes were 71 percent, up slightly from 2019, when the figure stood at 69.8 percent, while those who had opted to rent were 29 percent.
“Low-interest rates on mortgages and the possibility of taking advantage of the facilities provided for the under 36s, which induced many young people to buy, may have acted on the result. In 2021, in fact, in 65.3 percent of cases, millennials bought by resorting to mortgages, highlighting a growing trend for purchases with mortgages (in 2019 they were 62.6 percent and in 2020 they were 64.4 percent, ed.),” commented Fabiana Megliola, head of the Tecnocasa group’s study office. She then added that 34.7 percent of this category of buyers bought with cash and that, in the latter case, it was often the families of origin who financed the purchase. “The current scenario, however, which sees an upward adjustment of interest rates, risks penalizing precisely this market segment,” Megliola then warned, however, commenting on the current market scenario.
Motivations for buying a home
What are the motivations for a young person to take the plunge? And what are the differences from their parents? “Compared to older generations, millennials plan the purchase of a home according to the space requirements that the composition of the family requires at the time of purchase,” answered Diego Vitello, an analyst at Gabetti’s research office. “In cities with high market values and above the national average, such as Milan and Bologna, a millennial couple without children, for example, is more oriented toward buying a two-room apartment. On the other hand, previous generations planned their home purchase over the long term, thus in anticipation of an extended family.
Another difference is related to precarious employment, which is greater than 30 to 40 years ago, and which translates into less attachment of young people to where they live.” Finally, another characteristic should not be overlooked: “Potentially, millennials have as a goal to buy a house as soon as they start working, and they do so in order not to waste rent money,” Vitello added. This is why, according to Tecnocasa data, in 86.4 percent of cases (data for H1 2022), young people buy the main home, while only 10.5 percent do so as an investment, and the remaining 3.1 percent opt for a vacation home. The latter trend, which is growing slightly, has been positively influenced by the possibility of working remotely and thus being able to use the vacation home beyond the classic vacation period.
The rental solution, however, remains higher among young people living in large cities. Carrying out the same analysis on the transactions concluded by millennials in the ten large Italian cities, the ratio between purchases and rentals is, in fact, a little more balanced with a percentage that in the 1st half of 2022 stands (according to Tecnocasa data) at 63% in the case of purchases and 37% in the case of rentals (the latter figure down from 40.1% a year earlier). This is a consequence of the fact that large metropolises attract many young people for study and work reasons and that prices, on average higher than in other territories, lead people to choose renting, at least at first. Only later, especially if one has a stable job, does one buy.
So what characteristics must young people’s homes possess?
“The homes of tomorrow will have to give a concrete response to the new real estate demand from millennials and Generation Z, enhancing attractive elements starting from the design phase,” said Francesca Zirnstein, general manager of Scenari Immobiliari. She explained that “young people want homes that foster community, technological integration, and flexibility. New Milan pipeline projects include the Scalo di Porta Romana project. “Here will see the light of day a student campus integrated with the neighborhood in social housing, an accessible infrastructure for young people with about 1,400 beds converted from the Milan-Cortina 2026 Olympic Village,” concluded Manfredi Catella, founder and CEO of Coima.
And when looking at offices: what do young people need to work better?
“The office needs to be relocated as the beating heart of a company, where colleagues meet and spend face-to-face time with each other, with clients, and with management, while doing whatever work they would have no way to complete at home.” This is the new role played by the office today, illustrated by Maria Luisa Daglia, country manager of the Italian office of Agilité Solutions, who explained that millennials seem to be increasingly demanding an excellent work-life balance. They adapt to different and transient environments, preferring the office as the space par excellence for sharing, exchanging ideas, and team-working.
“For example, open spaces, which often score points from the perspective of reducing business costs and as spaces supporting collaborative and productive teams, show, on the other hand, several critical issues related to the difficulty of concentration and the penalization of other comfort factors,” he pointed out. “And even hot desking, i.e., the use of unassigned workstations (considered the future of the workplace) to function implies the reorganization of schedules and spaces, also because, to ensure a more comfortable and collaborative climate, only a certain percentage of employees can be physically present.
