The Millennial Ownership Lifestyle Paradox
It’s a shame, but there isn’t a lot of good press about the generation dubbed ‘millennials.’
Ranging from those born in the 80s to the mid-90s, businesses have bemoaned an apparent difficulty in reaching what should be the dominant consumer base for the next decade.
One of the more striking stats that have come from the many analyses of millennials as customers concern the likelihood of owning or renting a home. Some frame the statistics as a problem with the British housing crisis, with The Guardian saying that one-third of the generation won’t ever own their own home. Others show it as a lifestyle choice, with UK millennials ranking among the lowest surveyed countries as those who aim to buy a home within the next five years, per a 2017 study.
Here, we’re looking at the preferences and lifestyles of millennials through a general lens, seeing how two of the biggest lifestyle stereotypes about millennials results in their paradoxical relationship with the housing and renting markets.
In favour of renting for Millennials
If there’s one thing that has defined the generation’s spending habits, it’s that experience takes precedence over products. As explained by Inc, the preference ignited the experience economy, with 72 percent of millennials opting to spend on experiences instead of material items. Almost certainly driven by the new grading of one’s worth via social media platforms like Instagram. Items of use or value don’t give millennials as much gratification as going somewhere which can gain ‘likes’ through images online.
To go to several different places and pay to experience something new regularly, millennials need a great deal of flexibility and may not favour saving up large sums as short-term savings can get them the experiences that they crave. So, the flexible contracts and lack of upfront or upkeep costs of renting becomes ideal. Furthermore, renting opens access to far more lavish flats than buying, which also makes for status-enhancing posts online.
In favour of buying for Millennials
Coming in after a cash-splashing generation, millennials have turned the tables, being much more frugal, demanding that businesses up their game to earn their custom. millennials famously hate waste and will invariably seek the cheapest satisfying option. Due to this, millennials should be looking to get a mortgage over renting, with there being greater value for money and lower costs per month.
It’s easy enough to find the cheapest mortgages, and then beat the system by remortgaging down the line, with the online platform Trussle offering fast mortgage advice which can save hundreds per month. After getting the free mortgage advice, getting a property, and moving in, it was found that first-time buyers end up not only saving money per month but also, of course, increasing their wealth. Recent comparisons have pegged renting as being close to £700 per year more expensive than mortgage payments.
By calculating the return of house buyers over that which renters would have achieved if they’d put their money into savings rather than buying, it was found by The Conversation that first-time buyers were creating £12.40 more wealth for each £1 of the initial outlay. It was also found that an average first-time buyer would require just two years to break even, while renters never see a return on their payments.
As you can see, millennials appear to be stuck between two distinctly opposing angles. The desire to seek experiences for social status leads to the flexibility and lack of upfront costs of renting. Yet, millennials crave good spending habits and money, leading them to the natural choice of getting a house and the cheapest mortgage rates.
One allows for the regular gratification of experiences to post online, while the other gets more money to be saved and value to be claimed, with a reduced frequency in lavish experiences.