During the “good old days” of the 1970’s and 1980’s we coped with 24% inflation, 17% interest rates, the three day working week, 13% unemployment and power cuts but at least most people aspired to buy their own homes. Most people in work could afford to buy their own homes. Why aren’t 20 and 30 something’s buying houses in the same numbers as they were 30 or 40 years ago? Is this the dawn of generation rent forever?
Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Colchester (and UK) housing market. Potential first time buyers look at the size of deposit needed to get a mortgage and believe there’s no way they can save up enough. Combined with reduced job security, low wages and declining disposable income it is certainly challenging to get the money together for a deposit to secure a mortgage and get onto the Colchester property ladder.
However, although raising the deposit and having sufficient income, against a backdrop of rising property prices in Colchester, are real barriers to home ownership, I believe there has also been a generational change in attitude towards home ownership in Colchester and in rest of the Country.
Back in 2011, the Halifax conducted a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service (TDPS) revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle and generation rent forever is now a thing!
Renting is a fundamental part of the housing sector, and a significant change in the aspirations of young adult Colchestrians choose to be tenants because it suits their plans and lifestyle. Local Government in Colchester, including the planners (especially the planners!), land owners and landlords needs a Colchester residential property sector that can adapt to diverse choices made by the 20 and 30 year olds in Colchester that make up generation rent forever.
If we apply the percentages, from the recent TDPS survey, to the current 25,968 Colchester tenants in their 10,975 private rental properties, 9,972 Colchester tenants have no plans to ever buy a property – which is good news for the landlords of those 4,214 properties.
In the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year but does that mean the other third will be buying a property in Colchester in the next 12 months?
Some will, but most won’t. The Royal Institution of Chartered Surveyors (RICS) predicts that by 2025 the number of people renting will increase, not drop. Many tenants may hope to buy but the reality is different for the reasons set out above. Generation rent forever isn’t going to change anytime soon. The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly challenging for younger generations. For Colchester this would mean an extra 588 private rental properties a year for the next eight years (a total of 4,704 rental properties) bringing the number of private rented properties in Colchester to a staggering 15,679 households.
If you’re a potential first time buyer or you’re part of generation rent forever I’d like to hear your thoughts. Why do you think young people aren’t buying property anymore? Add your comments below or email firstname.lastname@example.org. Alternatively give me ring on 01206 862288 to discuss any aspect of the Colchester property market.