This year, the greatest activity in the new housing sector has been observed among the country’s youngest residents: nearly seven out of ten members of the Generations Y and Z are planning to purchase a new home. While real estate developers are happy to see a new generation of buyers entering the market, the different needs and behaviours shown by the youngest generations encourage developers to reconsider their priorities and processes.
According to a representative survey of the residents of Vilnius conducted by the public opinion research company Spinter Tyrimai, 74 percent of the residents of Vilnius aged 18 to 25 and 69 percent of those between the ages of 26 and 35 are planning to move to or purchase a new home.
“A similar trend in the real estate sector is observed across the world. People aged 18 to 35 who are attributed to Generation Z and Millennials or Generation Y, are becoming the most active property buyers. They start families, have children and gain a stable financial footing. These new circumstances shape their housing needs and the requirements for their prospective new home,” said Julius Dovidonis, CEO of Realco, one of the largest real estate development companies who commissioned the survey.
A home as a place to live and as investment
The survey has shown that the decision to move to a new property among 18 to 25 years old residents is usually determined by a shift in their needs (51 percent).
“It is often the case that the country’s youngest residents aged 18 to 25 do not have their own homes and they live with their parents or in a rented flat. After securing stable earnings, buying a home becomes their top priority. This fact is also supported by the survey results: 49 percent of the members of this age group reported wanting to own a home.
Moreover, the households in this age group often consists of two people so they are happy with properties with relatively small floorspace. However, they want an apartment in a newer-construction building and also show preference for locations closer to the city centre. Incidentally, youngest residents have demonstrated the greatest preference for living near the city centre among all age groups. This is explained by the fact the young people want a location that could meet their needs best. For instance, they want to live in areas where there are lots of places to eat, have coffee, enjoy various forms of entertainment or spend their free time,” Mr. Dovidonis said.
The decision to move to a new property among the residents of Vilnius aged 26 to 35 is usually determined by changes in their family status and the birth of children (38 percent). Over a half (58 percent) of the residents reported wanting to live in a larger home. Meanwhile 49 percent of them expressed preference for an apartment in a newer-construction building. Nearly one fifth (18 percent) of the surveyed residents from this age group do not yet own a home but are planning to purchase one.
It is interesting to note that young people are looking for new homes not only as a place to live, but also as an investment or as a vacation residence. Nearly four out of ten residents of Vilnius aged under 35 reported planning to purchase a second home as an investment, and nearly three out of ten of them reported planning to buy a second/vacation home.
“Lithuanians see investments in real estate as one of the most reliable and safe investments and this approach is prevalent across all generations. The buyers’ interest in vacation housing has also been on the rise over the last few years. However, the COVID-19 pandemic has accelerated this upward trend, as the travel restrictions made people seek alternative options to spend quality vacation time in Lithuania and encouraged them to look for vacation properties in their home country. This is also evidenced by the new home sales in the country’s coastal region. The sales soared in mid-summer are still showing strong numbers,” Realco’s CEO said, pointing out that the youngest generation who entered the real estate buyers’ market have very different priorities and requirements for real estate developers.
Emphasis on location and feedback
For young buyers, location and price are the top considerations when choosing a home. Recommendations from their friends or acquaintances are another important factor. Also, the so-called Generation Y and Generation Z want real estate developers to give their response as soon as possible but the older generation are the ones who make a buying decision faster.
These insights have been obtained after conducting a survey of the buyers of the residential properties at Linkmenų Ežerai and Žvėryno Panoramos projects being developed by Realco in the capital city of Lithuania. 81 percent of the residents between the ages of 22 and 30 reported the location, and 69 percent of them indicated the price as the most important consideration when choosing a home. Among all age groups, they were the ones who reported the latter factor as their top consideration. As a comparison, the price was an important factor when choosing a home for 41 percent of the residents aged 41 and older.
Moreover, the survey has shown that younger people rely on the recommendations from their friends or acquaintances making the decisions of buying a home. While only a few percent of older residents indicated recommendations as an important factor, there was not a single respondent among older buyers who reported relying on recommendations when choosing a home.
Mr. Dovidonis also added that young people are used to faster pace of life thus they have a preference for speed and responsiveness when communicating with housing developers. They are also less tolerant for deficiencies in the construction works than their parents or grandparents and this serves as an impetus for real estate developers to focus more on quality.
“We have noticed that buyers from younger age groups take pro-activeness and feedback from the housing developer for granted. They are particularly interested in each stage of the selling and construction process, and they expect that the developer will take initiative to provide detailed information as to what processes are taking place at a given time and that this information will be provided to them in an expedient manner.
The survey question about the defects and their removal has shown an interesting trend: buyers aged 22 to 30 had the last favourable attitude towards defects among all age groups. We may assume that people from this age group expect convenience and comfort from their new home, and the slightest unexpected inconveniences or warranty repairs are a great source of discontent among them,” Mr. Dovidonis said.
A survey of 1,210 residents of Vilnius commissioned by the real estate company Realco was conducted by Spinter Tyrimai in October. In September this year, the research company Rait surveyed a sample of 250 people living in Realco’s developments.