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Party not property?
by Sarah Modlock
It used to be considered fuddy-duddy to invest in a home before you really needed to. Unless you were married and thinking about children there was no need to tie yourself down with a mortgage. Now homes are not just for grown-ups. They are more than just status symbols. They are our havens of security and pleasure. Or are they?
Recent research suggests that the trend has come full circle and a new breed of 18-34yr olds prefer to rent in fashionable areas close to their social circles rather than committing themselves to a mortgage. This change in attitude and behaviour is revealed in research from mortgage lender GMAC-RFC. It explains why the percentage of first time buyers in the housing market has fallen from 50% to just 28% and the average first time buyer age has steadily risen to 34 years old.
Living in a desirable location is vastly important to young renters. Seven in ten prefer to rent because it allows them to live close to their friends, showing how important social circles are to this ‘live life to the full' group. P.O.P. people also value a ‘des res' with a further two thirds saying renting allows them to live in better area than they could afford to buy in.
Renting no longer a dirty word. The combination of a vast array of rental properties and an increase in graduates, who enter the workplace at a later age already saddled with debts, means renting is a popular option: 16% say the flexibility of renting simply suits their lifestyle better. Marriage and starting a family is also being delayed among young people so there is now an extended time in the average 20 or 30-something's life when they want to live with friends - six in ten non-homeowners said it was their main reason to rent.
More than half of those young renters questioned are comfortable with delaying their first step on the property ladder until they are over thirty. The fact that buying property is seen as ‘settling down' would seem to be one of the main reasons for these people holding back - nearly three quarters of those questioned felt this way. A further eight in ten tenants prefer renting because it means they're not making a big commitment to a specific area. Getting married would provide the impetus to buy to some renters whilst one in ten would buy when they want to start a family. Nearly a third of this age group won't be buying a property soon because they just don't want the commitment of a mortgage at their age.
‘Carpe Diem' generation
Living for today and not worrying about the future could be the motto for the P.O.P. generation. The ease of living and working abroad, high levels of employment and a general increase in personal wealth means that young people have the confidence to move around more - both geographically and career-wise. Nearly three quarters of those people questioned believe renting provides the possibility for future traveling and almost the same number believe it gives them the freedom to move jobs more easily. Independence is important for this group and three quarters think renting appeals because it allows them to fly the nest from their parents' house without having to buy.
'We wanted to understand why less first time buyers are entering the housing market,' explains GMAC-RFC's Jeff Knight. 'It is important to know, as a lender, that there are other important influences affecting this group other than the straight affordability issue. Buy-to-let landlords are making up the shortfall of first time buyers because they are directly linked. Private tenants looking for rental property are increasing as first time buyers are decreasing,' he adds.
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