Sunday, 15 December 2019

Homebuyer optimism lower among over-35s

Homebuyer optimism lower among over-35s

LEVELS of optimism about home ownership remain low among the over-35s, according to a new report.

The study by investment managment firm Fidelity International suggests that while optimism remains strong among the under-35s, it drops significantly in those aged 35 to 54, falling to just 23 per cent.

The increasing cost of buying a home means 54 per cent of that age group have never owned a property.

Meanwhile, the average age of UK first-time buyers has risen from 31 to 33 over the past decade.

Tom Stevenson, investment director for personal investing at Fidelity International, said: “Home ownership is deeply ingrained in the British psyche and the inability to get on the property ladder can be hard to accept.

“Renting can feel like throwing money away and the flexibility it offers is no substitute for the feeling of security that owning a flat or house can provide.

“These emotional considerations can matter quite as much as the obvious financial benefits of home ownership in recent years.

“Despite the challenge that house price rises present, home ownership remains an aspiration for 14 per cent of 34- to 54-year-olds.

“Interestingly, a tenth of over-55s share this goal, but 81 per cent of that age group who don’t own a home think it is unlikely they ever will.”

The most common reason given for not feeling ready to buy a property is the financial implications of doing so, with 40 per cent of 35- to 54-year-olds saying they don’t feel financially prepared to buy a property in the future.

Mr Stevenson added: “First-time buyers need substantial sums to get their foot on to the ladder, even with government initiatives like Help to Buy. And they must do so while in many cases continuing to pay high monthly rents. For those looking to take their first steps on the ladder, saving or ideally investing early is key to building up the pot that will be needed to pay deposits, fees and stamp duty.

“If you are investing for more than a few years this is likely to mean an exposure to the stock market — over longer investment horizons, shares have historically outperformed safer assets like bonds and cash.

“Minimising any tax due by sheltering savings in tax-advantaged accounts like an ISA also makes good sense.”