Finance Choices
The Young Shun Property
Buying a property is seen as both impractical and undesirable to a large number of 18-to-34-year-olds, new research reveals.
GMAC-RFC, the UK?s tenth-largest mortgage lender, reports today that a new generation of young professionals would rather rent in fashionable areas near their friends than commit themselves to a mortgage and a worse address.
As more people go to university - entering the workforce later in life and saddled with debt - property prices rise, and the number of rental properties increases, the nation's youth is moving away from the traditional desire to buy a home and settle down.
And these changes have seen the percentage of first-time buyers in the property market fall from around 50 per cent to 28 per cent, while the average age of a first-time buyer has risen to 34.
But this shift to continental-style renting is not hurting the housing market, as buy-to-let landlords meet this demand and buy-up suitable city properties.
"We wanted to understand why less first-time buyers are entering the housing market," explained Jeff Knight, marketing director of GMAC-RFC.
"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."
GMAC-RFC found that more than two 18-to-34-year-olds in three (68 per cent) choose to rent as it allows them to live near their friends, while almost as many (61 per cent) say renting lets them to live in better area than they could afford to buy in. Sixteen per cent believe the flexibility of renting just suits their lifestyle better.
Flexibility is also important for today's young renters, with more than seven out of ten believing that renting increases the chances of travelling and that it allows people to move jobs more easily.
Independence is also a key virtue of renting, with three out of four young adults saying moving into rented property allows them to move out of their parent's home without having to buy.
Buying a property is equated with "settling down", and this is something today's young people seem happy to put off until their 30s.
However, getting married would see 17 per cent of renters look to buy, while one in ten said they would like to own their home when they start a family.
GMAC-RFC, the UK?s tenth-largest mortgage lender, reports today that a new generation of young professionals would rather rent in fashionable areas near their friends than commit themselves to a mortgage and a worse address.
As more people go to university - entering the workforce later in life and saddled with debt - property prices rise, and the number of rental properties increases, the nation's youth is moving away from the traditional desire to buy a home and settle down.
And these changes have seen the percentage of first-time buyers in the property market fall from around 50 per cent to 28 per cent, while the average age of a first-time buyer has risen to 34.
But this shift to continental-style renting is not hurting the housing market, as buy-to-let landlords meet this demand and buy-up suitable city properties.
"We wanted to understand why less first-time buyers are entering the housing market," explained Jeff Knight, marketing director of GMAC-RFC.
"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."
GMAC-RFC found that more than two 18-to-34-year-olds in three (68 per cent) choose to rent as it allows them to live near their friends, while almost as many (61 per cent) say renting lets them to live in better area than they could afford to buy in. Sixteen per cent believe the flexibility of renting just suits their lifestyle better.
Flexibility is also important for today's young renters, with more than seven out of ten believing that renting increases the chances of travelling and that it allows people to move jobs more easily.
Independence is also a key virtue of renting, with three out of four young adults saying moving into rented property allows them to move out of their parent's home without having to buy.
Buying a property is equated with "settling down", and this is something today's young people seem happy to put off until their 30s.
However, getting married would see 17 per cent of renters look to buy, while one in ten said they would like to own their home when they start a family.
posted by Bruce Wayne at 6:23 AM
The Young Shun Property
4 Comments:
I wish I had bought a home 20 or 30 years ago instead of 3 years ago. It might be paid for by now. At least I refinanced to 20 yrs instead of 30 yrs (saving $62k in interest), so unless I pay it off early, it will be paid off when I am 73 instead of 80. But I am gradually converting money from an IRA to a Roth to take care of that, and maxing out my 401k.
I guess some people do not realize that having a home paid off by the time you retire can greatly reduce the amount of money you need for retirement, or greatly increase the amount of free spending money, and also provide some reserve when you eventually sell it. But I lived in apartments for 27 years, so I am not really setting an example.
It's hardly surprising that people aren't buying property at the moment.
You leave university with thousands of pounds of debt, start work and Gordon Brown takes as much of your wage as possible, with the rest going on rent, food etc.
Where exactly are you supposed to find the cash for a mortgage?
Hey ... I don't blame them, myself included in that list.
Buying a home in my area (Bay Area, CA) is simply too expensive and won't get me to where I want to live as a single, young professional. I'd rather live with friends and take all that money I'm saving and invest it in other kinds of assets (ie. not residential real estate in the bay area).
I think the problem we should be focusing on more is our (western) societies' consumer attitude; in general (not just young professionals), we spend about as much as we make and save very little, or less than nothing.
When properties taxes and homeowners' assoc fees cost as much as an apartment (ignoring the actual mortgage!), I don't see any problem with renting as opposed to buying. But I might be speaking only for my market...
All this stuff about "throwing money away" when you rent is ridiculous. Right now renting is a lot cheaper than buying a home. Prices have gotten out of control, so it makes more sense to rent. When rates go up a few points and the forclosures begin, home prices will come down to more reasonable levels. That is the time to buy.
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