Last month we discussed the help that first-time buyers are securing from extended family in order to gain a foot on the housing ladder. In the second of three features looking at the first-time buyer market, we are going to take a slightly different tack.
We have looked at the increasing trend of parental and grandparental support when factoring the cost of a first home and will now be placing focus on the attitudes and desires of first-time buyers themselves and how they have changed over the last 40 years.
More fun than functional
A recent study has revealed that over the past four decades there has been a huge shift in social priorities as first-time buyers no longer conform to the traditional family life and community, but instead opt for independence, lifestyle, travel and experience.
This social and economic change has seen a 26 per cent increase in the average age of the first-time buyer over the past four decades, from 27 in 1977 to 34 in 2007. Rising house prices have clearly been a contributing factor, however, what the study also revealed is that today’s younger potential buyers also have vastly different attitudes, aspirations and lifestyles to their counterparts 30 years ago. The move from the traditional family orientated motivations to purchase a home to the desire to gain independence and a sense of identity also represent a significant factor influencing the delay of the first home purchase.
In 1977, the top priority for a 25-year-old was buying a home and getting married. For the average 25-year-old in 2007 however, the top priorities have fundamentally changed when compared with their parents’ generation. 30 years on, buying is not such an immediate priority and less emphasis is placed on getting onto the property ladder.
As you can see from the graph at the top of the opposite page, spending time with friends, leisure and travel take over as the top priorities, compared with marriage and homeownership in 1977 – both of which have halved in importance for the average 25-year-old today. These choices often make getting on the ladder more difficult in later life – as the pursuit of life experiences and leisure often increases young people’s personal debt levels, while at the same time house prices continue to move out of reach for them.
Another dramatic shift to note on the evolving first-time buyer is how priorities change between the ages of 20-25 and the over 30 population, illustrated in the second graph on page 35. Those aged 20-25 place a large emphasis on purchasing their own property, with buying a home placed as their highest priority over other key life events such as career and getting married. In contrast, for those over 30 years old, the importance of buying their first home drops from their highest to lowest priority as other life choices such as having children and spending time with their friends become key to their daily lives.
Liberty and lifestyle
In 1977, the main reason for buying a first home was because of a recent nuptial. By 2007, the reasons have become much more self-orientated, with over half of first-time buyers claiming they simply wanted something that was their own. This corresponds with the fact that some 28 per cent of first-time buyers in 2007 bought their first home as a single person – almost double the proportion that did in 1977.
There has been a significant change in what first-time buyers now consider to be fundamentally important to ‘living properly’ when buying their first home, as shown by the table at the top of the page, with a clear move away from marriage and community to individual development, achievement and experiences.
In 1977 the overwhelming top priority for the average first-time buyer was living with a partner with whom they had a good relationship – a key ‘need’ for 71 per cent of first-time buyers. However, by 2007 this figure has seen a 25 per cent decrease to just over half of first-time buyers. This is further reinforced by data which reveals that marriage was one of the most important priorities for the average 25-year-old in the 1970s – falling by half when you look at the average 25-year-old today.
Furthermore, while over a third of first-time buyers in 1977 claim having a child was a key requirement to living happily; by 2007, this falls to 19 per cent – a staggering 44 per cent decrease. In fact, one startling piece of evidence from the analysis was that 50 per cent more first-time buyers in 2007 claim that having satellite television is more important than having kids, with internet access considered to be three times as necessary.
Perhaps the most revealing statistic uncovered by the report is the fact that the proportion of first-time buyers saying that being on friendly terms with neighbours is absolutely necessary to living properly has dwindled by almost a third. The image of the traditional community is rapidly being replaced by our emphasis on personal fulfilment. We are therefore seeing a shift from the neighbourhood community to one that consists of socialising with friends, watch-when-you-want digital TV and 24/7 internet access.
The fact that first-time buyers increasingly want life experiences before committing themselves to ownership and starting a family clearly has consequences and in addition, often when consumers decide to buy they go it alone. This clearly has an impact on what brokers advise first-time buyers today and the types of products available to them. More needs to be done to help individuals get onto the ladder, through product innovation, broker advice, affordable housing or the reform of our taxation laws for first-timers. The UK is a diverse and rapidly changing market, which will continue to pose challenges for buyers, particularly those seeking to buy their first home.
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