Buying a house is undoubtedly a big commitment and, up until now, seen as an integral part of growing up. However, analysts are questioning whether millennials have become too apprehensive to purchase property.
Prices for both buying and renting are skyrocketing; however, it's not just the money that may be putting millennials off a full commitment. Buying means stability; simply put: settling down. Renting is attractive because of its flexibility: there's nothing tying millennials to a rental.
Jeff Taylor, co-founder & managing partner at Digital Risk, told CNBC if millennials are at all "hesitant" on their social situation, they'll rent until they're comfortable.
The problem with property
Sarbjit Nahal, head of thematic investing at Bank of America Merrill Lynch (BoAML), believes millennials still "value homeownership", telling CNBC via email that the number of new millennial U.S. households formed from January 2014 to December 2018 is expected to reach 8.3 million, spending a combined $1.4 trillion on home purchases.
BoAML expect the number of homeowners in this age bracket (25-34 years) to recover to pre-2008 levels and top 16.5 million by the end of 2019, from the trough of 15.5 million in 2012.
However, some factors are in the way.
"Millennials' demand for homes has stagnated due to cyclical economic factors, like high unemployment rates, lack of wage growth and available credit," said Nahal.
"As such, millennials have deferred getting married and forming families, which has delayed, not derailed, homeownership. Stronger economic growth can address some of this pent-up demand."
A recent BoAML survey found the most common reasons not to buy were millennials weren't ready or couldn't afford it.
However, this property stagnation could turn. "Rising rents and a possible increase in interest rates later this year may drive millennials to buy. U.S. rents have increased 15 percent in the past five years vs. only an 11 percent rise in the income of renters."
Scared to commit?
Not exactly. It's easy to assume millennials belong to the developed world, yet, BoAML's Nahal says out of 2 billion millennials worldwide, 86 percent live in emerging markets. Living in different circumstances could mean a different angle on property.
Also in emerging economies, Nahal says that 56 to 60 percent of (BRICS) millennials live with immediate family. He added BoAML saw a "greater lag" in household formation in China, as millennials are staying single longer.
Paul Philipp Hermann, co-founder and managing director of Lamudi, told CNBC via email, that millennials in the developing markets feel "more confident than ever" due to increased purchasing power and technology.
"Thanks to growing economic empowerment, younger generations are looking to property for a safe financial investment, although many wish to keep their options open by first renting."
Hermann says that millennials in emerging markets used to be considered a "hard sell" for real estate, due to lack of spending power yet technology has "removed a number of barriers" for them as its helped millennials explore the property market online.
"Education is the key when it comes to encouraging millennials to buy property. With information literally at the fingertips of young potential customers, offering as much insight into the benefits, processes and paperwork involved in purchasing a property will make millennials feel more comfortable with buying," he says.
—By CNBC's Alexandra Gibbs, follow her on Twitter @AlexGibbsy.