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Nearly half of aspiring homeowners are prepared to rent for life

Despite many people aspiring to own a home, just under half (45%) think they never will, according to Fidelity International’s latest Modern Life Report.

While 65% of those under 34 are more optimistic about their chances of owning a home in the future, that drops significantly for people aged between 35-54, where only 23% of people feel the same way.

The biggest reason cited for feeling incapable of owning a property is the financial implications of doing so, with 40% saying they’re not financially prepared to buy a home in the future.

With the increasing costs of buying a home, 54% of 33-54-year olds have never owned a property. The average age of a first-time buyer has risen from 31 to 33 over the past decade, and the rise of the ‘artful lodger’ means 34% of adults aged 18-34 are living with their parents.

Another outcome of rising prices is the number of people continuing to rent, with 41% of those aged 34-54 and 24% of over-55s doing so.

Tom Stevenson, investment director for personal investing at Fidelity International, comments: “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.”

However, home ownership remains an aspiration for 14% of 34-54-year olds. Interestingly, a tenth (10%) of over-55s share this goal, but a whopping 81% of that age group who don’t own a home think it is unlikely they ever will.

“First-time buyers need substantial sums to get their foot onto 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,” Stevenson adds.

For those looking to take their first steps on the ladder, Stevenson suggests saving, or 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,” he concludes.

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