Affordabilty continues to be the greatest barrier to homeownership in the capital, according to newly released research from affordable housing developer, Pocket Living, who found that 63% of London renters believe owning a home would improve their quality of life, yet just 22% are currently able to save money for a deposit.
Pocket Living surveyed more than 1,000 Londoners aged between 25 and 45 to understand the pros and cons of London living. Of the 1,008 respondents, 38% own their own home, 52% rent and 8% live with their parents.
The research found that owning a home is a key aspiration in life for 73% of renters surveyed, yet current London property prices remain the biggest obstacle to achieving this objective for more than half (51%) of everyone polled. This is followed by 30% claiming they can’t afford a mortgage and 27% noting they are struggling to raise a deposit.
With data from Halifax suggesting that a typical professional couple looking to buy in London would need to raise, on average, a deposit of £132,685, compared to £20,000 at the turn of the millennium, it is clear that the barriers to homeownership in London are almost exclusively financial, dwarfing the obstacles caused by other issues.
Race for space
The race for space has been a factor for homeowners across the country since the pandemic began last year, with many looking for dedicated working from home spaces and bigger gardens. However, for 69% of Pocket’s respondents, and many of those who purchase a Pocket home, the most important criteria for them in their first home was simply having their own space.
Less than half of those polled (47%) said their current rental situation provides them with adequate space, giving an impression of Londoners pressed almost to breaking point by the conditions of the last 18 months. Many of those polled will likely have been living in homes of multiple occupation during the pandemic and, for months, were restricted in doing anything outside of the home other than exercising and shopping for food. It, unfortunately, therefore, comes as little surprise that having adequate private space is now a priority for the majority of those surveyed.
A magnet for first-time buyers
With many London renters either not satisfied with their living conditions or feeling priced out of the city, Pocket’s research suggests that London could potentially lose 15% of 25-45-year-olds in the next 12 months, with 12% of all age groups considering buying outside of the city.
Yet almost two-thirds (62%) of respondents agree that they “don’t want to move outside London to afford a home because they would have to sacrifice too much to do so”. This is supported by Pocket’s research which found that, of those who are looking to buy their next home, the biggest preference is to buy again in London. Despite issues with space, of those currently renting in London, over two thirds (69%) would look to continue renting in London over the next year.
The situation is fragile and COVID has caused people in their 20s and 30s to reappraise their lifestyles – but their heart is drawing them back to the Capital after a period of doubt. It continues to remain a magnet for first-time buyers and will remain so if housebuilders seek to prioritise the renewed needs of the next generation of Londoners.
The benefits of buying
Of the 38% of respondents who own their home, more than seven in ten claim their stability in life (72%) and quality of life (71%) is now better since buying. 68% also experienced an increase in productivity since owning their property, which can be potentially derived from having more space for home working. 66% of respondents ranked their local transport links as particularly good.
In addition, another seven in ten (71%) respondents are extremely or very satisfied living in London, and three out of four (75%) agree London is a special place to live in. More than half of owners (56%) would recommend prospective first-time buyers look for a home in London first.
This all supports what Pocket is hearing from its buyers, who enjoy owning a home in a city such as London because of the balance it provides. They have the comfort of living in their own private space which they can escape to after work yet also have the option to benefit from its renowned transport links and a diverse array of hospitality, leisure and retail offerings on their doorstep.
Priorities for London housing
The developer’s research reveals strong views amongst Londoners on the need for affordable housing, with 76% agreeing there is a greater need for affordable housing to accommodate new norms and ensure the vibrancy of London.
Of those working in London, unsurprisingly more than eight in 10 (81%) state that new housing in the Capital should consider new hybrid working and lifestyle balances within its design post-pandemic.
The polling also shows that the functional qualities of urban living have risen dramatically to the fore over the last 18 months. With many people continuing to work flexibly between their office and their home, Wi-Fi ranked as the third most important feature for Londoners (57%), placed just after access to transport and space, but ahead of storage and daylight. Clearly, 18 months of wrestling with erratic Zoom and Teams connections has left its mark, particularly on younger Londoners.
While public parks and green spaces are important to Londoners, private green space does not appear to be as important. Nor does amenity space, which is ranked as the tenth most important feature for those surveyed. This should be noted by the build-to-rent community which sets great store by this.
Marc Vlessing, Chief Executive Officer at Pocket Living, comments: “First-time buyers have suffered in silence during the COVID-19 pandemic. Many of them are city makers: the young doctors, nurses and teachers who have kept vital services running in the face of unprecedented disruption since March 2020, or those in the private sector, working from home in the technology or media industries in less-than-ideal conditions, sharing kitchen tables with flatmates while trying to drown out their friends’ Zoom calls and missing out on mentoring from senior colleagues.
“Almost all of them maintain a desire to own their own homes in London despite being thwarted by a range of obstacles, from affordability to instability of work, with the city continuing to be a magnet for those who enjoy the balance it provides those looking to live independently whilst still being surrounded by a buzzing and vibrant community. In London alone we’ve found that many of the city makers we speak to feel priced out of the Capital before hearing about Pocket homes. To combat this there needs to be a greater acceleration in the delivery of homes that meet the renewed needs of first-time buyers outlined within this research. In turn, greater supply will allow prices to remain manageable for first-time buyers and help them get onto the ladder within the communities they already call home.
“With Michael Gove now at the helm as Secretary of State for Levelling Up, Housing and Communities, it will be interesting to see how the Government looks to unlock more sought-after new homes for our next generation of Londoners. The First Homes policy alone won’t achieve this and needs to be reconsidered if it is to have the impact the Help to Buy initiative had.”