How Age Demographics Affect Home Buying in Pakistan?
A significant factor that determines home buying behaviour in a society is age. Home buying trends have changed drastically due to growing populations, increasing innovation in technology, and rapidly changing workplace dynamics. Disposable income and financial resources are also important in determining the type of houses an individual can buy. With the increasing global housing affordability crisis, millennials and generation Z are finding it more difficult to buy or rent a house compared to the older generation. A similar trend is also observed in Pakistan.
How financial resources affect home-buying for young people
In Pakistan, a high percentage of young people still live at home with their parents. But most of them wish to become independent and leave their parent’s home sometime in the future. In the developed world, this is a common phenomenon, but in developing countries like Pakistan, the lack of financial means makes this option a challenge. Rampant unemployment and economic hardships make it difficult to sustain an independent living for the young adults in Pakistan. A lack of finance is not only an issue for the young, but also the senior citizens as well, who cannot simply work their way into earning a living and must rely on other family members to take care of their housing needs.
Globally, the cost of buying a house is becoming more expensive. The youth of today mainly consists of millennials (the generation born in the 1990s) and Generation Z (Born after 2000). In Pakistan, 64% of the people are under 30, while 29% are aged between 15-29 years. However, comparing baby boomers (parents of the majority of the millennials and Generation X) who were able to afford a home much earlier in their lives, most millennials are not able to do that due to the rising costs of housing. This is mainly because the land is increasingly becoming scarce, and the population is increasing at an exponential rate. Thus, the threshold for affordable housing keeps on increasing over the years. This has led real estate developers to offer cheaper and inexpensive alternatives for conventional houses like condominiums, studio apartments, and shared-living spaces. The gap in housing affordability between the different generations (millennials and baby boomers) has changed the housing trends.
Changing workplace dynamics for the youth
Technological developments have cut down thousands of miles of the distance involved in communication. The communication channels now allow people to work and communicate from the comfort of their homes. Many procedures have shifted online, and the youth has been at the forefront of this change. General perception regarding youth and millennials is, that they are more tech-savvy than the older generation. Therefore, technology takes a centre stage in their life. With COVID-19 replacing conventional schools with online classes and companies integrating work-from-home into their mainstream work policies, the workplace dynamics for millennials is way different for it was for the older generation. The youth prefer to live in downtown areas where they can commute to the workplace quickly. On the other hand, the elderly people will prefer to live in a house in a suburb that is far from the hustle-bustle of the city. With the youth forming the majority of the modern workforce, they tend to dictate the workplace dynamics. Naturally, the young workers would need to live near their workplace, which most commonly is located in a downtown area of any city district. For instance, in Islamabad, a large majority of the workers come from neighbouring regions, and they prefer to live nearby to cut the commute.
Extended families versus nuclear families
The type of families, the number of people and relationships also determine the type of houses that are in demand. In Pakistan, previously most people lived in extended families as grandparents prefer living with their children even after they are married. The dependency ratio amongst family members also plays a crucial role in determining the size of the family. In some cases, a single head of the family is the sole financial provider which makes living in the same house affordable. Today, the trend is changing, as young couples aim to live independently, they tend to prefer small apartments to reduce the cost of living. Young couples can manage to live in small houses or apartments in the city as opposed to living in extended family settings.
Several factors affect the home buying behaviour of different age groups. While old people tend to live a quiet life with their grandchildren, young people prefer living in central areas of a particular district to remain close to potential workplaces, schools, colleges, and universities. The increasingly unaffordable housing prices are also limiting home buying and renting options for most millennials and young people.