The dream's to buy a home, even if it isn't a dream home

Customer service manager Sukanda Thepsupa, 26, bought a 34 sq m new condo in Bangkok for 3.5 million baht (S$142,000) in June with a 100 per cent loan.

"I had already intended to buy a place before the Covid-19 pandemic because I did my calculations and realised that, if I spend just 3,000 baht more a month on a mortgage, I could buy a place," said Ms Sukanda, who had been renting a condo for 7,000 baht a month. "This place I bought is brand new, and I even got a 500,000 baht discount from the developer."

Like her, millennials who are now in their mid-20s to late 30s are finally moving out of their rented apartments or parents' homes, and getting their own place. The Covid-19 pandemic has been a catalyst.

But making plans to buy their own homes hasn't been easy.

They have had to navigate an environment where home prices are still too high for those just starting out in life.

Ms Sukanda has to pay 10,000 baht monthly for her 37-year loan. That's about a third already of her monthly income, and she admits that she now tries harder to watch her expenses.

But for her, location and the view are important as she works from home. From her bedroom, she can enjoy the sunset, and on occasion, she heads up to the rooftop for an even better view.

"I find this place more convenient, and it helps to have a nice view and a common area where I can go to do some work if I want to get out of the apartment," she said.

Millennials who take the plunge and sign the dotted line to take out a mortgage mostly have to settle for a cheaper house in the suburbs. If they insist on staying in the prime urban districts, they would probably be paying for a pricey home so small that having children may be out of the question.

Still, many millennials are buying homes, and property developers and banks are avidly wooing them. Some have found opportunities to produce new sources of income during the pandemic, while others may have been fortunate enough to have parents who could pony up a zero-interest loan, or subsidise part of the cost.

The Covid-19 pandemic did not bring down home prices, which are still beyond the reach of most just starting out in life.

In Seoul, the average price of an apartment hit 1.1 billion won (S$1.3 million) in April, up from 607 million won in 2017.

Housing in China's busiest and most developed cities such as Beijing, Shanghai and Shenzhen cost around 14 times as much as the average salary. In Tier 2 cities, the price is about seven times the average salary, and it is five times the average salary for cities ranked Tiers 3 to 5, according to the Lincoln Institute of Land Policy in 2020.

Data from real-estate services company Savills shows that in Tianjin, a city of 15 million people south-east of Beijing, apartments in the upscale areas sell for around US$9,000 (S$12,286) per sq m, or about US$836 per sq ft, on a par with some of the most expensive parts of London, though disposable incomes are seven times as high in London as in Tianjin.

Tokyo and all the opportunities it offers continue to draw those in their early 20s. But people there are more likely to rent than work to get a place of their own.

More than three in 10 adults in Japan are renting. Even though banks there offer near-zero interest on housing loans, leasing has traditionally been the more attractive option because it offers far more flexibility than the mortgage payments that come with buying a home.

Millennials, in particular, are mobile, and may move across the country for work. A vast majority have so-called ancestral homes passed down from generation to generation, reducing the need for them to buy their own home even if these "ancestral homes" are out in the rural areas.

Mr Shuto Yano, 28, moved out of his family home in neighbouring Saitama prefecture to rent a 20 sq m apartment in Shinjuku in 2018, after tiring of commuting more than an hour on packed rush-hour trains daily. The game app developer told The Straits Times that paying 85,000 yen (S$1,025) a month for a tiny unit in the heart of central Tokyo was a worthwhile investment, as it allows him to walk to work, and walk home from catching a late-night film in the Shinjuku entertainment district.

"This fits my lifestyle to a T," he said, in his Alexa-equipped unit where lights can be switched on and off by voice command.

"On my days off, I tend to laze around, not doing anything much else but being on my computer all day long. And I don't need that much space living alone anyway - more space means cleaning up is a bigger hassle."

In Indonesia, millennials still baulk at securing a bank loan to buy their own home, as they weigh the merits of being stuck with a 25-year mortgage, or having to turn to their "lenders of last resort" - their parents.

Ms Jhoanne Marie Villamiel, the chief executive officer and real estate broker at PrimaShelter in the Philippines, said: "It's a sad truth that real estate prices appreciate faster than the income of employees… There are so many Filipinos right now, especially minimum wage earners, who want to have their own property, but we don't have any to offer them."

She said the cheapest home her company can offer, in Naic town 50km south of the capital Manila, requires a household income of at least 23,000 pesos (S$623). But the minimum wage in Naic barely touches 14,000 pesos.

The pandemic did provide opportunities for millennials to transition from being renters into full-fledged home owners. It has, for instance, made living farther away from the city, where prices are lower, an attractive option.

Some millennials have managed to hold on to their jobs despite the global slump caused by the pandemic that has led to massive lay-offs.

Others, like Mr Aze Gedalanga, 39, a content writer for an outsourcing firm in the Philippines, and his wife, Sheila, 38, a business consultant, have even been able to land jobs that pay more.

So, buying a home suddenly became even more viable, even if it is in the middle of a hard, sweeping lockdown, and the house is 60km south of Manila.

"It was a leap of faith… We needed to have our own house," said Mr Gedalanga. "I think it's a necessity, whether or not you are feeling uncertain about getting one."

Property developers and banks have been throwing incentives at millennials to entice them to buy their first home.

Bank Mandiri, Indonesia's largest lender by asset, said around 70 per cent of its overall annual credit went to millennials, as at October.

The bank is now offering a special mortgage that allows millennials to pay off their loans with smaller instalments that gradually increase, or pay only the monthly loan interests while their houses are still being built.

It also offers flexibilities that include loans of up to 25 years.

But signing a mortgage is not always a viable path, especially in countries where home prices are exorbitantly high and interest rates remain unattractive.

In these places, it usually helps to have a "Dad and Mum Fund".

Mr Julius Sandika Wirayudha, a research analyst at a securities firm, turned to his parents after he found out that he would end up paying three times the actual price of his dream home in Jakarta's satellite city of Tangerang with a 15-year mortgage.

He used his savings to pay the first instalment that covered a third of the price of the house, then paid off the rest with cash borrowed from his parents.

Half his salary now goes to his parents.

In China, home ownership has been high among millennials because of the financial support they get from their parents. An HSBC survey done back in 2017 of young people living in urban areas showed that seven in 10 Chinese millennials are home owners.

With most families being one-child units, Chinese parents see it as their duty to help their only child along. For example, investment services manager Zhang Yingchi, 32, said she and her husband have been planning to buy a house in Beijing so their daughter could get a good education.

They are currently renting a two-bedroom unit in Haidian district for 5,500 yuan a month.

"The schools in Beijing have much better resources than in my home town or my husband's in Henan in central China. We would like to raise our daughter in Beijing so that she can have a headstart in life," she said.

Many millennials in Thailand - which has the highest household debt-to-gross domestic product ratio among developing countries - are also putting off home-buying for now. They are not in any hurry anyway, as they look at home ownership through a different lens.

"In Thai culture, it was perceived that ownership of a house and a car signifies your stability and maturity in life," said CBRE Thailand's head of research and consulting Rathawat Kuvijitrsuwan. "But that has changed, with the new generations looking for the option that provides them with the best flexibility and convenience, as some see ownership as liability that comes with high maintenance," he added.