Finding a way onto the property ladder is harder than ever, and one group that is feeling this more than any other are the Millennials, those members of the generation that are aged 18 to 34. The trend for this group that have been priced out of the housing market has been to shy away from larger investments as well. That doesn’t mean that this tech-savvy generation isn't investing at all, they’re just doing it in different ways and this also applies to property investment. Let’s remember, they grew up with the Internet and lived through and watched the fallout of a recession that they didn’t cause.1
Millennials often carry a deep distrust of financial institutions as many watched on as the financial market crashed in 2008 and jobs became fewer. These people are now creating, consuming and investing in ways that were not available before.2 The challenges of the economy have made Millennials more aware about accumulating debt but have also caused a real shift in consumption and spending behaviours. Companies like Zipcar, Ridelink, Parklet or even Uber have made people think differently about car ownership, sharing and transportation. Businesses like Airbnb have forever changed how people, particularly Millennials travel, and other new ventures have changed how people shop, interact, date, work and share services. This shift has brought with it a new mindset about consumerism; the qualities of sharing and frugality are now seen as cool and clever. Millennials, unlike previous generations do not see ownership as a necessity; in fact, ownership can instead work as a barrier, bringing unnecessary care and maintenance.3
So this brings us back to home ownership and investment. A recent study carried out by Airbnb showed that nearly three-quarters of those polled between 18 to 34 held a positive view of the sharing economy. 4 It showed that they’re keen to find ways that disrupt the old industries and institutions, and it's been well documented that they are investing less, or investing at a lower risk than the generation before them. It’s not just that, they are also not as driven to see profit at all costs; they would seem to be more interested in the: "ancillary effects of investing" 5 Millennials have grown up in an era when huge financial institutions have collapsed around a subprime mortgage crisis. According to Business Insider, this has spurred young investors to be more trusting of technology than they are the big names in finance. This shift in behaviour and trust is spawning new startups that are encouraging millennials to save through apps, like Money Box or Acorns. In order to encourage alternatives to paying into a bank, these apps allow the user to make Micro-payment savings while spending at the till, by rounding up the amount spent.6
One might not be able to afford the deposit to buy a house but why shouldn’t one have the possibility of making money from property, especially with current interest rates so low? The emergence of other new technology and business models has meant that property crowdfunding platforms have given this so called ‘Lost generation’ opportunities to make money from property that was otherwise out of their reach. By working together, many investors can link up and share in the ownership of property, as well as share in any potential profits. This gives investors the chance to own without commitment, to potentially build a portfolio of small investments and without the risk that can come with home ownership.
According to the New York Times, Millennials are the primary demographic investing in rental properties through Crowdfunding. 7 These quick adopters of new technology are at the vanguard of the sharing economy and of new ways of investing, unafraid of trying something new and particularly when it cuts out the middleman. Property investment is changing, new technology is coming into play, and property crowdfunding platforms and Millennial investors are likely set to disrupt the way that people buy and invest in property.