Is home ownership irrelevant for Generation Z?

We have been living in the same estate over the last twelve years. When we first moved in, I noticed a middle-age couple and their son staying in the opposite house. I still recalled how this latchkey kid in his primary school uniform returned home alone after school and climbed upstairs to his room.

A few years later, one day I saw him coming back home in his mother’s car. Then I noticed he was alone in the car and the one behind the steering wheel.

(Wow, how dare he steal his mother’s car for a ride! I am going to tell his mom.)

As I came forward to confront him, he got out of the car, smiled politely and said “hi auntie”.

(How come he’s not scared after being caught red-handed?)

Then I noticed there was an orange color triangle label at the corner of the car’s front screen. I immediately held back my words and commented on the weather instead.

(Oops since when this little boy has turned eighteen already? He just looks a bit taller to me. I must have been traveling so frequently for the past few years that I haven’t seen him for a long time.)

These days I would see him waiting for his parents to come back from work, then drove either his mom’s BMW or his dad’s Mercedes Benz out. On some weekends, he drove home with his girlfriend. He would smile or wave at me politely every time he saw me.


Why own anything when you can share?

Then I notice there are more and more neighbors showing an orange color triangle label on their car’s front screen. The family staying next to the “latchkey kid” has a pair of twin boys who are now taking turns to drive their father’s BMW. Another neighbor next to them has a young daughter driving the family car.

Suddenly, all the kids around have grown up and they are all driving. And they are all driving their parents’ cars.

Now I understand why COE prices have been low for some time. In December 2018, COE prices for cars up to 1,600cc fell to eight-year low at $23k. Although prices have gone back to the $30k level, it looks unlikely that they will go back to their heyday of $90k.

My nieces are learning driving now. The twin girls said they want to get a car license but they have never thought of buying a car. My 14-year-old daughter wonders why anybody in her generation still bother to get their own wheels when there are so many options, from public transportation, taxis, rental cars, car-sharing to Grab or Gojek.

“Can I drive daddy’s or mommy’s car after I get my license?” she asked.

“Of course you can … if I still keep my car by then.”

“And please don’t sell this house, I want to stay here with you forever.”

Oh my god! My efforts of teaching her to be independent all these years have all gone to waste. I stayed in the college hostel since I was 17. Then I stayed home for over a year after graduation, before moving out at the age of 23. What’s happening to the Generation Z?

I couldn’t help but using my ten fingers to count neighbors who have at least one grown-up child in their 30s or beyond, stay single, and are still living with their parents. Do these parents mind about their children’s failure to launch?


Consumption behavior of Generation Z

Below are my observations of how Generation Z like to spend their money. They include teenagers and those in their 20s. They are my neighbors, ex-colleagues, relatives, friends’ children and my own kids.


1. They don’t buy stuff. They buy experiences.

They may be working and earning their keep. But they are not planning to buy their own car or their own place. Not because they are less materialistic. But what Baby Boomers and Generation X are fancy about – driving a nice car or buying a nice home – are not their priorities.

Instead of buying “stuff”, they tend to buy experiences. My best friend’s daughter just made use of her post-A-level break to go on a US trip with friends. I am counting the years my elder daughter will still go for her annual backpacking trip with me before she goes on vacations with friends or boyfriend.

Generation Z crave for experiences, including overseas trips, fine dining, new gadgets or any first-hand experience that they think is cool to share with others in social media.


2. They don’t buy what you sell. They buy what fit their lifestyle.

To Baby Boomers and Generation X, car ownership is a status symbol in Singapore. Only those who can afford to pay COE and ERP can drive. To Generation Y or Millennials, car ownership is optional. To Generation Z, they don’t understand why they need to own a car.

To Baby Boomers and Generation X, home ownership is a Singapore dream. They work hard to save for the down payment and pay for the mortgage. To Generation Y, buying a roof over one’s head is important, but not a must. To Generation Z, they don’t think home ownership is a priority when there are options of living with parents, renting and co-living.

Buying means fixed costs with loans, maintenance fees, taxes and expenses. Renting means negotiable prices within budget. For things one can rent, why buy?

Carmakers may come up with the latest models. Developers may continue building new development. In the past, you build, they will come. In the future, what if you build, they won’t come?


3. They don’t live for others. They live for themselves.

Baby Boomers and Generation X are more status conscious. They care about how people look at them: What they are doing for a living; what title they have in the company, what home they are living in, which car model they are driving, which school their kids are going … All their life they are living for the others.

Generation Y and Generation Z still care what others think about them, but more for friends and fans in the social media. They don’t worry too much about what others think about their job, accommodation or transportation.

Unlike Baby Boomers and Generation X, they are not motivated to do better than their parents. Even if they live up to the society’s expectations, they are at most doing what their parents are doing. How exciting is that?


How the new generations affect the housing market

Real estate tycoon Sam Zell mentioned his concerns about the impact of the Millennials’ mindset on housing in a CNBC interview.

The change in habits can be attributed to the millennial generation, particularly those in their upper 20s and 30s, who are more likely to delay getting married, having children, and saving money.

Zell doesn’t think millennials, who are more likely to have kids in their 30s rather their 20s, are a “new breed or new DNA. But he sees the change in habits as new opportunities in the market.

“That means that we have a huge group of people with enormous disposable income that we need to address and deal with as customers,” he said. “I, eventually, think that they’ll buy houses and have children, but I think with a much more connected-to-the-center-of-the-city approach.”

The billionaire investor also points to other factors, such as savings, as for why demand for homes is low. Statistics show that the savings rate is also down to historic lows, which affects the economy, he said.

“If you don’t have savings, you don’t make down payments,” Zell said. “Therefore, the housing market is affected quite dramatically.”(CNBC, October 31, 2018)

Zell was talking about the Millennials. What about the up-and-coming Generation Z? With more and more of them joining the workforce, they are the new potential buyers for both BTO flats and private condos.

Singapore has an extraordinarily high home ownership rate of 91.5 percent. We have over 80 percent of the population staying in HDB flats. The housing market for the Baby Boomers, Generation X and Generation Y are very saturated. We also cannot expect a large proportion of HDB dwellers to upgrade to private homes. It all depends on their affordability, home prices and the economy.

If Generation Z prefer to be single, stay with parents, marry late, have no children, or rent rather than buy, where will the future demand for public and private housing coming from?