41% said that the cost of living is the key challenge preventing them from buying their first home and 43% have delayed buying due to high prices
New research from Yorkshire Building Society suggests that a fifth (21%) of UK 18-to-34-year-olds and three fifths (59%) of those aged 35 to 54 are not sure if they will ever own a home or are not planning to do so at all.
The mutual also asked would-be FTBs about the hurdles preventing them from buying, and the things they cited included concerns about the level of financial commitment a house represents, affordability and the high cost of living.
In fact, 41% said that the cost of living is the key challenge preventing them from buying their first home and 43% have delayed buying due to high prices. Half (50%) said they feel so overwhelmed by the complexity of the current market, they have given up even looking for a property to buy.
Meanwhile, the Society’s own analysis suggests opting out of owning could result in renters being £2.6 million worse off over their lifetime – not to mention the impact on their ability to pass on wealth to future generations.
This is based on a comparison of renting versus buying over the 55-year period from 33 – the current average age when people buy their first home – to 88, the average lifespan of a person today.
Over this period of time, the average borrower would pay £367,000 in mortgage payments, while the renter would pay £1.6 million in rent.
However, while the borrower would own a property worth £1.7 million after this time, the renter would have nothing to show for it. Even if they were to invest the equivalent of the FTB’s 5% deposit of £10,000 over this time, their money would only be worth £155,000.
Not only that, but £960,000 of the renter’s £2.6 million additional spend would result from continued rental payments over the 20 years from retiring at 68, while the buyer would have no accommodation costs to pay for other than occasional maintenance.
Unlike the renter, they would also have the flexibility to release capital from their home to support their retirement lifestyle or pass on their accumulated wealth to their loved ones.
All of this is particularly telling given that the Society’s research showed that the key motivator for buying among 55% of people was not wasting money on rent. This sentiment is felt most among people in the 35-44 age bracket (64%) and those aged 45 to 54 (67%).
Ben Merritt, Yorkshire Building Society’s director of mortgages, said: These latest research findings are perhaps our most stark yet, pointing to a potential loss of faith in the idea of homeownership.
That – along with our lifetime analysis of what this means for anyone who has to settle for long-term renting – shows just how big an issue this is for the UK right now, which our respondents have seconded in the priority they have assigned to housing, he added.
