Home ownership is the single biggest goal for generation rent, especially people in the age group of 20-34 years in London and the South East, according to a latest research report from bespoke legal services provider Collyer Bristow.
The report titled ‘Home Ownership Attitudes & Aspirations’ revealed that 62 per cent of the renters and would-be homeowners aspired to own a home in the next five years in London and the South East. Interestingly, more men (73 per cent) aspired to own their own home than women (57 per cent).
Across the age ranges, home ownership aspirations change dramatically, with 100 per cent of 20-24-year-olds surveyed hoping to own a home, falling to 59 per cent for 25-34-year-olds, rising slightly to 63 per cent for 35-44-year-olds.
These statistics reveal the rising aspirations among renters and aspirational buyers to own a home in London, one of the top residential hubs in the world. The gap between demand and supply of housing continues to widen in London, as the number of prospective buyers is growing year-on-year.
Moreover, house prices in London are growing at a healthy rate. Average house prices in London have increased by 95 per cent over the past 10 years and now, despite a fall in recent months, stand at over 14 times the average salary. Across the wider South East, the picture remains similar, with house prices having risen by around 65 per cent.
Rents across the capital have also increased by 25 per cent over the same period and now stand at an average of around £1,500 a month for a two-bedroom property. Outside of London, the rental landscape across the South East varies, yet average rents remain high with the same two-bed property costing around £800 a month.
The Government’s Help to Buy scheme has without doubt helped first-time buyers get on to the property ladder and will continue to play an important role. But still, home ownership remains out of reach for those living and working in London and the South East. In London alone, it is estimated that by 2025 approximately 60 per cent of people will live in rented accommodation – called ‘Generation Rent’.
Consequently, parental assistance in buying a home is now common in London and the ‘Bank of Mum and Dad’ is growing in significance. About 32 per cent of respondents surveyed as part of the study claimed having received help from parents with the purchase of their home and 40 per cent said that they would turn to their parents for support. Unsurprisingly, given increasing house prices, London buyers tend to rely on the ‘Bank of Mum and Dad’ more (33 per cent) than those across the wider South East (28 per cent), the study revealed.
It is evident that shortage in housing supply is unlikely to be overcome any time soon. A paradigm shift is required to deliver adequate number of homes to buyers. Institutional investors are investing ever increasing amounts into the UK rental market, developing dedicated Build-to-Rent schemes, creating quality homes with transparent pricing that will, over time, change the shape of the rental market. At the same time, the focus should be on innovative housing models to help reduce the time taken for new homes to enter the market.
Source: Collyer Bristow