Millennials “Restart” The Real Estate Market
The pandemic and the abolition of the Cyprus Investment Programme may have caused a crack in the Cypriot real estate market and intense concern among the business community, but a second reading of the data shows that the picture is not so blurry. On the contrary, the real estate sector has a lot to offer if it focuses on the needs of other groups. Besides, it is now clear that local demand will once again boost the real estate industry, the same way as it has helped maintain its performance during the last year.
LionGlobal’s recent survey on the first-time home buying market shows that Millennials are expected to be the dominant force in the real estate market in the coming years.
Until now, we have been under the wrong impression that apartments are the type of property younger people prefer. This impression may have been created from the trends that have prevailed in recent years abroad. However, it seems that Cypriot Millennials think differently. At least that’s what LionGlobal’s survey on “Millennials in the first-time home buying market”, participated by men and women aged 25-39, showed.
They want the… American Dream
From the participants’ answers, it is clear that Cypriot Millennials are differentiated, as they have the American Dream in their mind, which is owning a large and spacious home with a garden.
More specifically, when asked about the ideal type of property, 55% of participants stated that they would prefer a house, with a very large number of them stating that the minimum internal area in which they would wish to live is 166 sq. m. Similarly, 50% of respondents believe that a garden or a roof garden could affect their decision in buying a house, while two-bedroom apartments were the most popular choice amongst those indicating they would prefer an apartment.
As for the ideal location of buying a house, 76% of participants cite easy access to goods and services as well as to their place of work as one of the most important characteristics.
A very good example is Imperio’s Sunset Gardens in Limassol, a green development consisting of numerous facilities and amenities aiming to satisfy the most modern lifestyle sought by Millennials in a location outside the city centre (next to the largest casino in Europe, the Casino City of Dreams Mediterranean) but with easy access to the city’s business centre.
They prefer to buy
Another interesting finding is that, contrary to the widespread impression that this age group is content with renting a property, Cypriot Millennials prefer to buy a home.
More specifically, 34% of participants reported that they would prefer buying instead of renting as this is viewed as a more affordable option. In addition, 67% of participants believe that buying a house at its early phase of construction represents a better option, either because they believe they can benefit from a better price or because they can make some internal modifications.
“Appropriate” prices
Based on the survey, Millennials seem willing to buy a home, but at a much lower price than the existing ones, especially in areas close to the city centre of Nicosia and Limassol.
More specifically, they seem to be tempted to buy a house if it is sold at a price of approximately €270,000. Respectively, they are willing to pay €125,000 for a one-bedroom apartment, €180,000 for a two-bedroom apartment and up to €225,000 for a three-bedroom apartment.
Prices and down payment pose an obstacle
In trying to purchase a home, Millennials seem to be faced with some obstacles, such as the rising property prices and finding the down payment required by banks in order to be granted a loan.
According to LionGlobal’s survey, 77% of participating Millennials who are in the process of buying a home have a down payment of up to €45,000. At the same time, a large percentage of the sampled participants are not aware of the loan terms offered by banks nor of the interest rate subsidy scheme implemented by the Government. At the same time, 59% of participants wishing to buy a home consider high property prices as their main obstacle. However, 75% of respondents believe that the decision to buy a home is a good investment under the current circumstances.
Willing, but ….
In his statements, the Director of LionGlobal, Nicolas Gavriel, noted that “Millennials are willing and wish to buy their first home, but are facing financial obstacles. In this context, the adoption of a comprehensive first-time home buyer support programme is more necessary than ever. In other countries so as in Cyprus, a model should be invented that will enable the new generation of buyers to secure a big part of their down payment. In this way, on one hand, many Millennials will realise their dream of owning a home, and, on the other, the real estate market will experience a new era of prosperity”.
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