Young People & Property: Why It Is Advisable For the Youth to Own Property in 2022

Young People & Property: Why It Is Advisable For the Youth to Own Property in 2022

By Matseleng Mogodi

This article was originally published by Real Estate Investor Magazine.

As a Property Practitioner your experience why would you advise a young person to own a property?

When you look around, there is a lot of pain and suffering, especially amongst young people. Young people want to get things done, they want growth, and they want to work. This is because they can see that unless they act their futures may be bleak. Therefore, without having huge capital to invest, owning a property could be one of the starting points to redeem one’s situation, and start to feel worthy, that you have acquired an asset that will grow.

We know there are many broken families, and this had led to split family units, where young people have had to fend for themselves and rebuild, therefore property ownership starts to bring back that dignity and foundation to move forward and build for your own future. The greatest thing of all is the kind of drive that one observes in young people wanting to get things done, against all odds.

In terms of affordability, what are some of the available strategies that young people 

can look at in order to enable them to either buy or invest in property as a whole?

The pivotal point is the ‘knowing’ of what a young person stands for, what they want for their life, and what they are willing to do that many young people are not willing to do. This would help craft the best strategy to pull some capital together to embark on the property investment or ownership journey. When one is clear, they become creative and they think objectively. There are many quick strategies that can be used like starting to consistently save a portion of their income towards a property acquisition, or ensuring that their credit profile is attractive through having ‘clean’ debt, this means small debt that is well serviced and provides feedback about how the young person treats debt, it could also be looking at what property one wants to attain and for what purpose, then come together with like-minded people, not too many, to share the burden and co-own the property. For different individuals, one can think way beyond and get even more strategies which could be ignited by the young investor and the energy and zest they bring to the table. Big things can be built from a great attitude.

Since it has become a norm in today’s society for young people to cohabit, how much of an impact does this have on their ownership of property?

It is a known thing that most young people of today do not view marriage the same way most oldies do, and this is based on their own observations of relationships, their own beliefs and 

visions for their lives. Therefore, cohabitation is quite common, and a lot of young people have chosen to do things together and build together. However, it is imperative that when young people choose to cohabit, they have an agreement in place that outlines their ownership of property and other assets, and what would need to be done should they decide to part ways. Young people may be crazy in love, but they are much wiser to know it may not be forever, therefore buying a property together requires some level of maturity and being realistic about life in general.

How important is it for young people to ensure that they have a healthy credit record since it either enhances or decreases their chances of owning a property?

I have noticed that most young people that come into property ownership are usually quite clear and ready to purchase, meaning that they have made some serious decisions about money. They seem to know the repercussions of poor money management. Then of course we also come across those that have chosen the fun lifestyle, nothing wrong with that, but it may have a negative impact on their credit score when they do decide to buy or rent. I would advise that young people should look into prioritising the things that would make their lives less stressful, and this includes the freedom to live in their own space, which requires some financial discipline. It is that question of ‘eating your cake and still expecting to have it’ scenario.

The debate amongst young people has always been, to rent or buy? Which one is more sustainable and effective?

Indeed, this is a critical decision to make. There is no one size fits all in this case. When young people are starting out, especially in a new job, away from home, it would be advisable to start with renting whilst accumulating data and finance to make a decision to buy. Most people would love to own a property, because owning a property does not mean you have to live in it. However, I recently chatted to some young people, who felt that ownership comes with a lot of responsibilities, so renting is easier because you do not worry about maintenance and servicing the financial institution, debt and municipalities as well as everything else that comes with property ownership. They were wise enough to point out that they would in the meantime be saving so that when they are ready, so that they can have some cash available to help with the deposit and other costs to ensure they can reduce the monthly repayments and save in interest payable.

Closing remarks on the youth and their perceptions on what property is all about

Most young people want their own ‘space’, but this is unfortunately not something that can just be acquired, one has to progressively work towards attaining that freedom. They also differ widely in terms of owning at a young age, because of meeting a potential life partner who may want something else, or worse still, there’s is a what-if question of ‘what if we want to buy elsewhere and I have another bond’ and many other small, but big concerns which are real. I have resonated with the savings part, which still allows that opportunity to buy and not be hindered by affordability issues at a later stage.

Moreover, if a young person chooses not to buy today, then it is highly advisable to start saving because when they do decide to buy, it will be highly beneficial to have savings, it widens the choice instead of being constrained to a place you do not like due to low affordability. The big word I think, is to save money as it will give you your immediate freedom, the government will not give you the freedom, you have to define what that freedom is for you, and you have to work towards that, the property will never be a bad choice for wealth building, but you have to know what you are doing, and know why you are doing it. Looking at the current economic challenges, girding yourselves up as young people will go a long way in helping you to manage your expectations about what is possible and the time frames involved in getting things to work.