Renter optimism grows as more eye homeownership

A fifth of renters believe homeownership is achievable within five years, the highest level since February last year, according to new data.

The Barclays Property Insight report reveals growing confidence within the housing market, particularly among Gen Z buyers aged between 18 and 27 years old, as they step onto the housing ladder.

The data also reveals semi-detached properties have risen in popularity among first-time buyers.

Confidence in the housing market has bounced back

According to Barclays report for August, a third of recent Gen Z buyers, aged 18 to 27, said they bought a ‘forever home’ so that they wouldn’t have to move. Similarly, nearly three in 10 of all recent buyers said they intend to stay in their new home for at least 10 years.

Confidence in the housing market has also bounced back slightly after a six-month low, rising to 29% in August from 26% previously.

According to the report, 22% of renters believe homeownership is achievable within five years, up from 16% last month and the highest level since February.

However, amidst reports of record high house prices, nearly half (47%) cite this as a major barrier to ownership, up from 38% in July.

More than half (61%) of renters have seen or expect to see their housing costs increase this year, squeezing their ability to save. To manage expenses, 40% are reviewing their budgets, 43% are cutting back on small luxuries, and 27% are reducing holiday spending.

Encouraging to see growing optimism

The report also reveals an increase in popularity of 30+ year mortgage terms. Among first-time buyers, these account for 41.3% of purchases, as they are typically younger and so have longer to pay back a mortgage.

When asked about their preferences, nearly four in 10 (37%) mortgage holders feel 30-40-year terms are more desirable than shorter durations because they could mean lower monthly repayments.

Mary-Lou Press, President of NAEA Propertymark, says this shows first-time buyers are planning ahead.

She said: “Given the long-standing concerns about housing affordability, especially for first-time buyers who often don’t get onto the property ladder until their 30s, it’s encouraging to see growing optimism among them about when they might be able to purchase their first home.

“This shift also suggests that more buyers are becoming aware of the financial realities they face, such as the likelihood of longer mortgage terms to make repayments more manageable. Alongside this, mortgage products have improved year-on-year and have adapted to the slow tapering of interest rates, which are the lowest they have been in two years.

“With the Bank of England set to decide on interest rates this week, a further cut could make owning a first or new home a more achievable goal for many.”

Gen Z want a dedicated work-from-home space

The Barclays report also reveals first-time buyers are increasingly turning to houses, with semi-detached properties making up over a third (33.5%) of August’s first-time purchases, up 1.7% year-on-year. Meanwhile, flats declined in popularity by 2.7%, accounting for a fifth (19.6%) of first-time buyer homes.

When choosing a property, certain features are more highly sought after by those in different life stages. Nearly half (49%) of Gen X, aged 44 to 59, and 40% of millennial homeowners said they prioritised having a garden or outdoor space.

Meanwhile, Gen Z were much more likely to want a dedicated work-from-home space (28 %) compared to 20% of millennials.