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The European dream of owning a home

The dream of home ownership is alive and well. But what impact will a longer life and rising mobility have on the real estate market? Is real estate still suitable as a form of retirement provision for young people?

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Owning their own four walls remains a goal in life for young people in Europe

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Just like their grandparents and parents before them, young people today still dream of owning their own home. This is demonstrated by a number of surveys: nine out of ten people in France under the age of 30 would like to own their own house or apartment later in life, while eight out of ten people ages 16 to 25 in Switzerland and Germany would also like to own a home.

However, reality lags behind desire in every country, as home ownership rates show.  

Just a pipe dream?

So for young people the dream of owning a home remains just that – a dream. The Swiss need the most time to (be able to) fulfil their dream of owning a piece of property. A first-time buyer in that country is 48 years old, 14 years older than his or her German neighbour and 17 years older than a French counterpart. In Europe as a whole, the average age of a first-time home buyer is 31.

However, those who do finally wind up buying a property hold it long into old age. There is not much reliable data on the length of time people hold a property. Based on statistics for the transfer of ownership of properties, the Statistical Office in the canton of Zurich calculated a “virtual ownership period” and concluded that people keep apartments for an average of 34 years and single-family houses for an average of a full 52 years. An analysis in Germany showed that eight out of ten survey participants view their home as an “important part of their retirement provision”. There is a similar view in France, where two out of three survey participants said that a home is the best way to “prepare financially for retirement”.

No longer a lifelong purchase

There is a counter-trend. Professional and geographic mobility is constantly rising, as the Swiss Life study “How we will live tomorrow” shows: with the ability to work whenever and wherever, the study concludes, housing is moving “from a stationary concept to one that is more mobile”. As a result, home ownership is no longer viewed as a lifelong purchase, but rather increasingly as an investment for a certain life stage: “Ever more people want to be able to move around flexibly, allowing them to preserve a certain amount of independence.”

«Owning a home means freedom and self-determination»

What impact will these trends have on the real estate market in general and the purchasing behaviour of young people in particular?  How are the needs of Millennials changing the real estate market? And what role will owning a home play in retirement provision in future?  Philipp Urech, Managing Director of Swiss Life Immopulse, provides some answers. 

Mr Urech, surveys repeatedly show that the desire to own an apartment or a house remains intact. Why do young people today still want to own their own home?
Owning a home means freedom and self-determination. Simply being able to do what one wants to do. In this age segment, it is associated with starting a family.

Real estate is proverbially “safe as houses”. Is property really a good investment for individuals?
As a general rule, yes. Well-maintained real estate has increased in value over the past 25 years, especially as land has become more expensive. Persistent demand for property also supports future price development. But it is important to be realistic. Over the long term, other asset classes will see better performance. There is a highly emotional value to owning a home.

Is real estate still suitable as a form of retirement provision for young people?
As long as the macroeconomic situation does not fall apart and the economy continues to be stable, real estate will continue to play a central role in retirement provision.

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Philipp Urech, Managing Director of
Swiss Life Immopulse

“When the Baby Boomers start selling off their properties, the market will have to absorb a lot of old construction.”

How is demographic change altering the real estate market?
In general, we are living longer and as a result we are remaining in our homes longer, which means we need more residential space. Increased longevity and medical progress also mean that we will continue to see strong growth in the healthcare, senior care and nursing care markets. So we have increasingly longer functional requirements for real estate.

Will there be a supply overhang and thus a reduction in prices if the real estate owned by the Baby Boom generation of the 1940s to 1960s comes on the market?
When the large cohort of Baby Boomers start selling off their properties, the market will have to absorb a lot of old construction. Depending on the level of construction and the increase in population from abroad, this transition may occur without a drop in prices.

“Today, a spacious apartment in the city with good connections to public transport is a sine qua non.”

Professional and geographic mobility has increased substantially in recent decades. What does this trend mean for individual property owners?
In other countries, especially in the USA, real estate is almost seen as a consumer good. As a result of the trend on the labour market, fast changes must be possible there. In order to be well prepared for geographic evolution, it is important to live in a standard property, which can be sold more quickly, if necessary. Expensive or architecturally unique properties can in some cases become an albatross.

What are the biggest differences between Baby Boomers and Millennials with respect to buying real estate or residences in general?
A large single-family house on a big piece of property used to be the sine qua non. Now, it is a spacious and stylish apartment in a city with good connections to public transport and the airport.

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