Chinese millennials who are stuck in their parents' homes because they can't afford to move may actually be good news for retailers, says a new report, which finds that the money that’s not going to their housing is being spent on shopping and entertainment.
According to a CBRE survey of 5,000 Asia-Pacific millennials (out of 13,000 globally) between the ages of 22 and 29, including 1,000 from mainland China, 63 percent of millennials from across Asia are still living with their parents. With over 60 percent of mainland Chinese millennials living with their parents, they have the third-highest rate of doing so in Asia after Hong Kong and India (which are both around 80 percent).
This is due to both cultural norms and sky-high property prices in Chinese cities that make buying real estate unaffordable for this young consumer group, says the report. More than 50 percent don’t see themselves moving out of their parents’ place within two years, with 28 percent saying it will take them two to five years to move out.
This doesn’t mean they don’t want to get a place of their own—which is an especially important goal for those trying to start a family. Close to 90 percent of Chinese millennials aspire to buy property in the future, a rate that’s the highest out of all Asian countries surveyed and far higher than the Asia-Pacific average of 55 percent.
But rising property prices make that aspiration an uphill battle—especially in mainland China. The report finds that Beijing is the most expensive property market in Asia, and buying a home would take an average of 25.2 years of a millennial’s income to be able to pay for it. Guangzhou was second at 20 years, followed by Shanghai in fourth place behind Hong Kong at 17.4 years. A total of 80 percent of Chinese millennials surveyed said wages are not keeping up with property prices, and 70 percent said that their generation is forced to rent because buying property is out of reach for most.
In order to make home ownership work, Chinese millennials generally need to get two sets of parents involved to help them make the down payment. Parental support is indispensable for more than half of the survey respondents from mainland China, as 66 percent said they felt people could afford to buy a property with family support.
Living at home with parents and not having to pay a mortgage or rent, however, means they’re both saving more and spending more on shopping than peers from other regions. While Asia-Pacific millennials manage to put away 18 percent of their income in savings, the report says that they also spend more on leisure activities and shopping than counterparts in cities across the world, as basic living expenses take up an average of 28.3 percent of their income. Even in the expensive mainland Chinese cities Beijing and Shanghai, the cost of living is half of what it is in New York.
Millennial Chinese consumers spend 14 percent of their incomes on non-food shopping, marking the highest rate in the Asia-Pacific region. And while online shopping is massively popular with them, they still enjoy browsing brick-and-mortar stores. In fact, one-third of all respondents from the Asia-Pacific region said that “shopping is a leisure activity," and 23 percent said they go shopping in order to spend time with friends and family. While Asia-Pacific millennials spend an average of 4.7 days shopping online, they also spend an average of four days visiting a shopping center to shop, and three days doing so to visit for a reason other than shopping, such as going out to eat.
They’re also much more likely to spend on entertainment than North American and European counterparts. Chinese millennials go out almost 10 days a month, while North Americans do the same 7.4 days and Europeans only five days a month. Eating out is by far the most popular, followed by going to movies and then live events.
The report’s advice as a result of this data is for retailers in Asia to continue to focus on making shopping areas experiential through a combination of entertainment, dining, and stores—a trend that’s already taken hold in China. It does also add the caveat that retailers shouldn't necessarily be optimistic in the long-term about members of this group being stuck at home with their parents. While Chinese millennials may be spending more freely now, China's slowing economic growth combined with high property prices could have a detrimental effect in the future by making them much more inclined to focus on saving rather than spending, especially in pursuit of home ownership.
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