If you are a millennial, you should own a home, perhaps?

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There’s one country where 70 percent of all millennials own a home. Depending on which source you read from, millennials are categorised as those born between 1982 till 1998? That’s when I arrived home to Malaysia after my studies and started to work so that I can pay my own bills and give some to my parents. So yeah, I am Gen-X and not categorised as a millennial. Most of colleagues would be millennials. That’s because I am working in an IT-related organisation and boy, these millennials are not the same as me. Many  are fast learners as long as we acknowledge this fact and share with them as a mentor instead of a lecturer. In fact, many understood the reasons for getting a property and instead of asking, ‘should I buy,’ they would be asking me direct questions like, ‘is RM400,000 considered high,’ or ‘should I buy closer but it’s a high rise or should I buy further but it’s bigger / landed. All are valid questions. What about the millennials in the number 2 largest economy today? (That’s China by the way) Well, 70 percent of them ALREADY own a home.

I read a BBC article entitled, “The country where 70% of millennials are homeowners” which quoted a study by HSBC showing over 70 percent of Chinese millennials already own or paying for a home today. This is by far higher than 35 percent in the US (I think I know why), Britain at 35 percent (no wonder Londoners gate the foreigners for pushing up prices…), Malaysia has only slightly over 30 percent (if the survey is done in a few more years, I think this % will rise a lot due to the many affordable homes being launched and built today) while in Australia, it’s slightly lower than 30 percent. (Median prices in some cities are really unbelievably high versus pay)  In UAE, only 28 percent of the millennials own a home. My old friend, same age just bought a place in Abu Dhabi. It’s over a million US$ by the way. Regardless of what currency, how many can actually afford such a home? This is not all. 83 percent of those surveyed who were not homeowners would like to buy within the next 5 years! As for Malaysian millennials, 94 percent wants to get a home! Some countries however have the perception that renting is the same as owning and it’s socially acceptable too. For example in the French cities of Paris and Lyon. Many of these millennials have not yet saved enough for a deposit. (Yes, that’s why there are many measures to help them here in Malaysia)  So, how do Chinese millennials buy that home? They ‘applied’ to Bank of MUM and DAD. 🙂  There are less women around (China’s one child policy) and men with a home is more appealing. The report also shared this, “Many love stories fail to turn to marriage if the men fail to provide a marital house.” The parents are also able to save 30 percent of their income. (This is something not common these days. Some say it’s because of high cost of living…)  Oh yeah, the full article again. Here. 

If you are a millennial and you are reading this, remember this. Not everyone will buy a home. In fact there’s nothing wrong with renting. Just remember to save enough,as if you are paying for a mortgage every month. Those having a home has one advantage; hedging against inflation. You see, assuming we earn RM100,000 a year and we somehow managed to save 10%, that’s RM10,000. Pretty impressive for a millennial. 🙂   However, a RM400,000 home appreciating at just 2 percent per year is already RM8,000. It’s effortless while we continue to save for some other investments. I know, we have to deduct the mortgage interests etc but this is a reducing percentage. Renting wise, it’s the same percentage; 100%, every month, every year. Millennials are definitely the biggest group that can afford a home in the near future. The Gen-X meanwhile are too old to stretch the loan repayment period to the maximum and hopefully most would already own a home or decided to rent till they retire. Happy learning and applying my dear millennials.

written on 8 April 2017

Next suggested article:  Did not buy, so it’s because of affordability 

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