As millennials are finding it more and more difficult to step onto the property ladder, many young adults are looking to property crowdfunding to take that first step.
Shojin Property Partners, a property crowdfunding platform, has been around for just a year and has raised more than £3 million across five projects in the UK. Property Reporter analysed research from this crowdfunding platform, showing the high number of millennials involved in Shojin.
With the youngest investor being 18 years old, 23% of its investors are under the age of 32. In the past year, the average amount invested by millennials came to £21,721, which is 32% higher than the investments made by those aged between 33 and 47.
Jatin Ondhia, chief executive of Shojin Property Partners, stated: “The majority of millennials do not have a large enough deposit to purchase a property and the banks are giving them very low returns on any savings they have.
Many millennials are facing years of saving and renting before they can even think about purchasing a property.
“It’s no surprise then that property crowdfunding has become very attractive to this age group, giving them the opportunity to get a foot on the property ladder, with an investment starting from just £5,000. Millennials are early adopters of technology, so they are happy to use their smartphones to invest small amounts of money across a range of investments.”
Crowdfunding is becoming more popular in the property market as a whole. Recently, The House Crowd completed the biggest crowdfunding property acquisition in the UK – a £15 million property development in Altrincham, Greater Manchester.
Millennials find alternative way to enter real estate market
Property crowdfunding has become an enticing choice for millennials because this age group typically has less disposable income to invest in property. Additionally, less young adults are owning property and many are even fearful of getting a mortgage.
With buy-to-let properties coming with the risk of void periods where no rent-paying tenant is in the property, this type of investing can be difficult for young adults to commit to. However, crowdfunding platforms that mitigate this risk by agreeing to assured long-term rental agreements can be valuable investment opportunities for millennials.
Crowdfunding platforms prove to be an ideal stepping stone for those interested in property investment, especially those who are technology-savvy. As getting on the property ladder in the traditional way of buying a home is becoming more challenging, millennials are looking at other ways to get their foot in the property market.