London Living - Generation Rent
#LONDONLIVING2019
It takes the average single first-time buyer 16 years to save for their deposit in London. Small wander then that Generation Rent are looking at alternative life paths. But as Jessica Mueller, analyst at DTZ Investors argues, they are not unhappy about this fact as some have stated – indeed, it would seem that as one door closes, literally in this case, another one opens.
The Oxford Living Definition of Generation Rent is: “A generation of young adults who, because of high house prices, live in rented accommodation and are regarded as having little chance of becoming homeowners.” In our view, this definition is somewhat simplistic and paints an incomplete and negative picture of an excluded generation. For today’s young people, who are happy to share rather than own and want convenience over stability, renting is a positive choice and not just a financial inevitability.
Millennials have been the focus of conversation for many years now as they were set to become the largest population cohort and have the largest disposable income, however a study from Bloomberg of UN data has just found that Gen Z (Millennial successors) will account for 32% of global population by the end of 2019. Millennials are just behind at 31.5%, although their spending power will still be far greater than Gen Z. Gen Z is classified as anyone born from 2001 onwards or until the next meaningful cohort develops.
Generation Rent to us is a mixture of Millennials and Generation Z, it includes anyone that has grown up in a digitally connected and consumer driven society. The two cohorts have their individual characteristics but still share many similarities. They have always known Amazon, which started as an online bookstore, 25 years ago. Today, the company sells thousands of products for the same or next day delivery. With 63% of 16-24s and 52% of 25-34s having access to its premium service, it would seem that most of Generation Rent wouldn’t be able to live without it. Whether it be music, films, food or a rental car, Gen R expect instant access to whatever they need, online.
This digitally connected society has driven the demand for non-commitment contracts and both memberships and contracts are becoming short-term. Netflix and Monzo are prime examples, you can cancel and reopen your account with no extra charge. These possibilities are engrained into the values of Generation Rent, which is why the idea that Generation Rent is desperately but unsuccessfully trying to enter the property market doesn’t ring true. Owning a home can bring responsibilities and inertia.
Renting on the other hand gives greater choice and flexibility on location and price, which is much more appealing to someone who is moving into a new city and trying to find a career they are passionate about. Renting does come with its difficulties, there are high deposits, inflexible contracts and, as mentioned previously, a lack of supply for good quality but affordable flats. It is ironic that the rental market has not yet adapted to the requirements of Generation Rent, however new entrants to the market, particularly in the Co-Living sector are beginning to bridge the gap.
LondonLiving is a weekly thought piece looking at different aspects of life in the capital; from the logistics of deliveries, the plight of loneliness, through to how generation rent is shaping its future.