IPE Developments Managing Director Mohammed Adnan Imam benefits from a wealth of experience of property development, with his company having undertaken major projects at prime locations across London and beyond. This article will look at the residential property market and an apparent shift from ‘generation rent’ to ‘generation buy’.
According to studies by the real estate company Zillow, housing experts anticipate that the share of Gen-Z homeowners will be larger in 2036 than the share of millennials who owned their own homes in 2021. Generation Z appears to be on course to become homeowners at a higher rate than millennials, suggesting a possible evolution in the market as the gap between renting and buying shortens.
Some of the biggest hurdles to homeownership are saving the hefty deposit required, as well as satisfying the stringent requirements of mortgage lenders. In its Helping Generation Rent Become Generation Buy paper, the UK Government outlined plans to provide sustainable market solutions to help first-time buyers gain access to mortgage finance. The paper lobbied for action on both sides of the supply-demand equation, calling for a homebuilding boom to provide affordable properties as well as increased access to financial schemes helping people to purchase their own homes.
In many parts of the world, it is not only property prices that have soared beyond the means of many: rents have increased at staggering rates too. Co-living is a shared housing arrangement that offers convenience, community and critically, affordability. Typically consisting of a furnished house or apartment with private bedrooms and bathrooms but shared amenities such as lounges and kitchens, co-living provides tenants with access to a range of services, including utilities, cleaning and WiFi, that are all included in a flat monthly fee. For young professionals, particularly Gen-Z and millennials living in expensive urban areas, co-living has become a popular option to make life more affordable.
Characterised by an interest in experiences rather than possessions, prioritising location and lifestyle and more conscious about their environmental impact, millennials and Gen-Z have turned to co-living in their droves to enable them to live in desirable locations without compromising on comfort. It should be remembered that working practices have evolved considerably in recent years, with remote working gaining considerable traction. This has paved the way for a new generation of ‘digital nomads’ capable of working from anywhere with an internet connection, enabling them to travel easily and operate from different cities or countries.
For some Gen-Z and millennials, however, the increased availability of homeworking arrangements has sent them in the opposite direction. While a pre-pandemic survey conducted by Hillarys revealed that 34% of millennials reported no desire to own their own home, research suggests a post-pandemic shift in attitudes. While many millennials did not prioritise homeownership previously, favouring instead flexibility and the ability to easily relocate and change jobs, today millennials and Gen-Z alike are coming to appreciate the importance of homeownership. After all, purchasing a home not only provides them with somewhere to live but is also a physical asset to safeguard their financial future. According to research from the real estate marketplace Hommati, a staggering 97% of Gen-Z now have aspirations of homeownership in the future, with 87% planning to buy before the age of 35.
For previous generations, homeownership was a given for many. People worked hard, saved a deposit, took out a mortgage and purchased their own property. In the current climate the decision to rent or buy is far more multifaceted, fraught with complexities including a rise in zero-hour contracts, burgeoning student debts and the cost-of-living crisis. Nevertheless, although the pandemic may have made buying a property harder, it does not appear to have quashed the appetite for homeownership among Gen-Z, with many taking positive steps to make the seemingly impossible happen, including relocating to less expensive areas, finding roommates and taking out longer-term mortgages.
