Rise of the ‘Guppies’

A startling 42% of adults between ages 18 and 39 who currently do not own a home have abandoned the dream of becoming homeowners in the next decade, according to a new survey [1]. This includes 38% of individuals earning over £60,000 annually. The data reveals an alarming trend among those under 40, who are more likely to live with their parents than plan to buy a property.

The escalating cost of living has emerged as a significant obstacle to purchasing property for the younger generation. High mortgage rates compound this issue, presenting a formidable challenge to potential homeowners. However, not all hope is lost, as many young adults are exploring alternative routes to homeownership.

ALTERNATIVE ROUTES TO HOMEOWNERSHIP

There are alternatives to homeownership, which include relocating to more affordable regions, buying properties with friends, investing in fixer-uppers or even constructing their own homes. These innovative solutions show a glimmer of resilience and adaptability in the face of the homeownership crisis.

The term ‘Guppies’ is now used to describe more than four in ten British adults under 40 who are yet to own a home. This group predominantly comprises young professionals with substantial incomes who have ‘Given Up on Property’. This trend starkly contrasts with the ‘Yuppies’ of the Eighties and Nineties – young urban professionals easily able to afford a home.

IRONY OF THE MODERN HOUSING MARKET

Even among those with annual incomes exceeding £60,000, 38% have renounced the dream of homeownership in the next ten years. Only 21% are confident about affording a home in the forthcoming decade, while a meagre 14% are currently planning or in the process of buying one.

It’s striking to note that most under-40 Brits do not own a home. A mere 22.5% of those aged 25-34 and a paltry 1.4% of those aged 24 or under own a property. Today, the research identifies that under-40 nonhomeowners in the UK are more likely to live with their parents than plan to buy a home.

HOMEOWNERSHIP OBSTACLE COURSE

The dream of owning a home has become increasingly elusive in today’s market. Roughly 64% of potential homeowners who have renounced the idea of owning a home within the next decade attribute their decision to the escalating cost of living. Further, over half (51%) point to rising house prices, while nearly half (49%) are deterred by soaring mortgage rates. Prospective first-time homeowners are not backing down without a fight, with 85% confessing they’ve made significant financial sacrifices to make their dream a reality. Holidays have been sacrificed by 34%, social activities have been cut back by 30% and a quarter (25%) have halted their future savings. Surprisingly, one in ten (10%) sacrificed personal relationships or dating to afford a home.

YOUNG BUYERS ADJUST EXPECTATIONS

Younger individuals are finding creative ways to climb onto the property ladder, even if it means making compromises. Of those under 40 planning or buying their first home, a staggering 69% admit they had to make concessions regarding their property. The most common compromises include settling for less desirable locations (31%), purchasing homes in need of repair (18%) and giving up extra rooms (17%). Many young adults are considering relocating for more affordable housing options. Only 33% of nonhomeowners under 40 believe they can afford a property in their current location, while 23% think they could manage if they moved further away. Those willing to relocate would have to move approximately 37 miles on average.

POWER OF LOCATION

Therefore, exploring new areas could be the key to homeownership for many. Interestingly, moving back to childhood towns might benefit some, as 37% believe they could afford a home there. This figure rises to 49% in Scotland and 45% in Yorkshire and the Humber, while it drops to 27% in the South West and 33% in the South East.

Today’s young adults are open to unconventional homeownership routes. Almost a third (31%) of nonhomeowners under 40 would consider part ownership or help-to-buy schemes, and 18% would contemplate buying with a friend, colleague or sibling. They’re also willing to roll up their sleeves, with 20% open to renovating a near-derelict home and 19% considering building their own. Additionally, 17% would consider relocating to a cheaper area and working remotely.

SURVIVING THE HOME OWNERSHIP MAZE

Most survey respondents commented that they couldn’t afford a home in their current or childhood location, so exploring alternative areas might be necessary. Numerous schemes are designed to assist first-time homeowners, including shared ownership schemes and 95% mortgages. Buying with a friend or partner can significantly reduce costs. Despite alarming news about skyrocketing mortgage costs, several options are available, so choosing the right one is crucial.

Despite the numerous challenges facing today’s younger generation, homeownership might be more attainable with the right knowledge and understanding of available options.

Don’t forget, our professional friendly advisors are on hand to support you and can help you explore all of your options.

Source: