Potential homeowners are much different than previous generations. They are more likely to enquire about a home via phone, email, app or website rather than visiting an estate agent directly. Aspiring homeowners also require significant funds to obtain a mortgage and face scrutiny from lenders when checking their affordability. Although this may be familiar for current homeowners, first time buyers face a new and daunting process they won’t have experienced before.
Renting is the New Normal
Many first-time buyers avoid home-ownership and instead opt for renting. Many find it difficult to save enough funds for a deposit and all the other fees associated with the home-buying process. Furthermore, some don’t know where they want to settle, and renting allows them some form of freedom whilst adapting to the events in their lives. As a result, many opt to rely on renting a property in order to have a home.
According to the latest English Housing Survey, home-ownership levels have fallen from 71% in 2003 to 63% in 2017. The institute of Fiscal Studies recently discovered that one in four middle-income young adults own their own home. This is a decrease from two in three young adults 20 years ago.
First Time Buyers are Finding it More Difficult
There is clearly a change in attitudes to renting as more young people are finding it harder to get onto the property ladder. One of the biggest obstacles of home-ownership is the rising cost of housing. In 1986, the UK average house price was £38,467. In 2006, that figure rose to £251,679 which is a 554% increase over the course of 30 years. Furthermore, this increase has overtaken salary growth. As a result, renting has become a more viable option in the eyes of young first-time buyers.
First Time Buyers Might be Older Than You Think
When thinking of first time buyers, many people think of young adults barely in their early twenties who are looking to be more independent and start a life of their own. In fact, the average first time buyer is now 30 years old, with an income of £40,000 per year and they typically borrow £134,000 on a loan-to-value (LTV) of 85%.
It’s clear that young people want to seek independence and have their own home. However, they are choosing to rent because it appears to be an easier option that suits them. The age of first time buyers indicates that more people are choosing to buy when they are financially stable and have gained more overall experience.
