The attitude towards house buying is changing and millennials are at the forefront of shaping that change. Gone are the days of staying at your mum and dad’s house, cramped in your teenage bedroom whilst you try and save up for that all important deposit for your first home.
More and more millennials are now choosing to rent rather than buy, with thanks to crippling student loan debts and the after effects of the Great Recession being the major catalysts in the change in attitude.
ATTITUDES OF THE MILLENNIALS
Two major issues that affect millennials today are contributors to the change in attitude. For many, they simply choose to rent rather than buy, mainly due to the era of ‘nownership’ becoming very popular in recent years. ‘Nownership’ is a term used to describe the favouritism of experiences over ownership of goods or property. More and more people are valuing a fulfilled life of experiences, social events and creating memories over getting on the property ladder.
The trend of ‘nownership’ is filtering into other markets too. The market for renting clothing and accessories is growing and as a result one in five people in the UK are interested in renting items from their favourites shops. It’s often the case that rather than spending over £1,000 on a designer dress to only wear it once or twice, companies such as Girl Meets Dress allow consumers to rent a dress for a set period of time before sending it back.
Nownership is a term used to describe the favouritism of experiences over ownership of goods or property.’
The ease of being able to rent something that is often financially out of people’s reach, is something that millennials reach out for. Music and films are also markets which are taking advantage of the nownership trend. Rather than buying physical CDs, DVDs and Blu-rays, people are enjoying the convenience of companies such as Spotify, Netflix and Now TV, who all allow their customers to stream or download music and film.
The other contributing factor is the high cost of being able to afford to put down a deposit on a property. In today’s current property market, you’ll need a minimum deposit of five per cent of the property’s value, meaning if you wanted to buy a property worth £100,000 (and good luck finding that), you would have to save at least £5,000 to put down as a deposit.
Low wages and a rocky property market means today’s millennials just cannot afford that five per cent, deposit. Instead, renting is the more affordable alternative that better suits the needs of the modern individual who prioritises flexibility and convenience. According to Property specialists The Open Property Group, with house prices set to rise ever more in 2017, renting is only going to get more popular in the months and years to come.
Renting can often be seen by some as ‘throwing money away’, with that cash spent every month potentially being better off put towards a deposit or paying off a mortgage. A report by the Resolution Foundation suggests that millennials will spend around £53,000 on rent before the age of 30. This is an astonishing amount but it’s one that some of that generation feel is their only option. Buying a house is expensive and there’s a lot of additional costs and fees involved, so sometimes renting is the most affordable option for many people.
POPULAR IN EUROPE
The trend of ‘nownership’ is also filtering into wider Europe, with countries such as Spain adopting the trend. More and more young Spaniards are also choosing renting over buying and the European financial crisis doesn’t help either. The dream of owning a house has been passed down by parents of Spaniards for years but now many of their children are opting for renting after seeing people losing their homes and access to credit.
Another major factor for people choosing to rent is the housing shortage that Britain is currently faced with. It’s easy to see why there’s shortage, some houses such as a Victorian terrace can be converted into six or seven bedrooms suitable for students, whereas families are more suited to a house with at least two or three bedrooms.
However the Government is investing a total of £3.7bn into addressing the housing crisis in Britain. There’s an aim to build an additional 140,000 homes in London by 2020/21, but will these houses be affordable for today’s millennials? A further £1.4bn will be set aside for affordable homes, resulting in a more affordable and manageable rent or ownership.
It’s difficult to forecast whether buyer demand will ever bounce back, as people’s personal circumstances are forever changing, along with the property market itself. So for now, Millennials are creating themselves a lifestyle and a home that sits comfortably in their budget.