Residential target markets identified

Any residential property marketing company that endeavours to keep its agents and franchisees abreast of the latest trends must recognise the three main categories defined by marketing analysts whose aim is to penetrate the middle class. This was said recently by Tony Clarke, Managing Director of Rawson Properties.

“The three categories,” he said, “have been very clearly depicted. They are the Baby Boomers born between 1940 and 1960, Generation X born from 1965 to 1980 and Generation Y born between 1977 and 1989.

“It is,” said Clarke, “important to recognise the very different lifestyles, priorities and tastes of each group so that one knows what to offer them - and one has always to bear in mind that housing for many may not be anywhere near the top of their wish list.”

The Generation Y group, said Clarke, now 21 to 31 years old, has attracted considerable attention from marketers because they are currently earning more than at any previous stage in the world’s history - but for residential marketers they may be far less important than the older group Generation X, now 30 to 45 years old

The Generation Y group, said Clarke, tends to go for instant gratification. Brought up in relatively affluent circumstances, for several years they will put lifestyle, travel, entertainment and sophisticated gadgetry - including cars - well ahead of a property purchase. They may well, he said, find themselves lost without a pc, a cell phone, an iPod, a music system and other new technology. They tend increasingly to resist settling down until near or over 30 years old and often remain dependant upon their parents for additional finance for ten or even more years after leaving school.

Generation Y people, added Clarke, have seen their elder siblings and possibly parents struggle in the recent recession and even lose their jobs - and this has strengthened their tendency to resist acquiring fixed assets.

In general, therefore, this group rents rather than buys property, said Clarke, until they finally marry and have children. Like Generation X, they dislike commuting and will increasingly look for premises on the fringe of a CBD or close to their workplaces. Many, in addition, will make arrangements whereby they can work at home at least part of the time.

“This is a trend observed worldwide,” said Clarke. “In South Africa it means that areas like the City Bowl, Century City, Woodstock, Ysterplaat and Observatory in Cape Town will gain in popularity, as will the Sandton CBD, Kensington, and Observatory in Johannesburg and the North Coast and Upper Highway areas in Durban.”

Inevitably, he added, once Generation Y have finally bought their first home they tend gradually to adopt a more settled lifestyle of Generation X, but it can take anything from ten to 15 years after they have left school.

The baby boomers, said Clarke, probably bought their first home before they were 26 or 28 years old and are now in their third or fourth home and looking for retirement complexes. These, however, will also tend to be close to the high density urban fringe areas because the baby boomers choose, if possible, to be reasonably close to their families and offspring.

Almost all categories of property buyers these days, added Clarke, are now more value conscious and less likely to rush into purchases - but this could change in a year or so as the banks continue to ease up on their lending criteria and on credit for consumer items, the purchase of which have so bedeviled the property market in the last five to ten years.

Among those benefiting most from the current trends, said Clarke, are the buy-to-rent residential investors who in South Africa today are very seldom without a tenant for more than two or three months and who, as Rawson Properties Chairman, Bill Rawson, has recently pointed out, are getting returns commensurate with what they could earn on reputable fixed deposit accounts.

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