Karolina Davies, Yarlington’s Head of Home Ownership and Sales looks at the customers of the future, their needs, aspirations and whether we’re building the right homes in the right places.
Yesterday, I had the privilege of speaking at the Chartered Institute of Housing’s annual South West 2019 conference to ask, are we building homes for the wrong generation?
As someone who works in sales, it’s my job to market properties, but taking an honest step back, I asked myself, am I talking to the right people? Who are the customers of the future? What do they want in a home? And crucially, are we building the right homes, in the right tenures for these future customers?
I couldn’t find clear answers so I took on the task myself to research who our customers of the future are and what they need from housing providers.
Our upcoming generation of customers are aged between 16-37, typically known as millennials. By 2020, 1 in 3 adults will be a millennial and they’re soon to make up 75% of the workforce.
Millennials are often stereotyped as ‘frivolous’ and ‘sheltered’. We also believe that they don’t want to buy, they want the freedom and flexibility that comes with renting and matches their frivolous and spontaneous lifestyle.
However, when researching who they are a bit more, I found them to be frugal. Although they earn 20% less than their parents, millennials save the same amount of their salary per year. Surprisingly, with those savings, 58% plan to buy a home in the future.
Looking at current statistics though, that’s not so achievable. In the south west, the average income is £25,000 and the average house price is more than 10 times that! Does this have something to do with the decision to rent?
So, unsure as to whether millennials really want the flexibility to rent or want to buy but just can’t afford to, in March 2019, I carried out a survey, sent directly to millennials to ask them about their housing aspirations. 254 people responded.
The survey asked respondents about their living arrangements; 45% said they were a homeowner and the second highest percentage said they rented or lived with their parents. Focusing specifically on those who don’t own, I asked if they wanted to own? 79% said yes in the next 5-9 years and 89% said in the next 10 with ‘stability’ and ‘security’ coming out as key reasons why.
What about the home itself? I asked customers to rate 22 different areas based on importance. Unsurprisingly, 99% said price, followed by size, the look of the area and access to services. This didn’t change when looking at just those with children or the youngest of the age group.
Based on the respondents’ desire for easy access to services and a quality location, it was assumed that our future customers want to own in urban areas, but based on prices, they can’t afford to live there.
So I asked, if money was no object, where would they live? 49% said in a village and 38% in a town – not what I expected.
Now with a better picture of what customers of the future want – at least those in the south west – I think we can be confident that we are building for the right generation; their aspirations aren’t far removed from our other customer groups, they want to buy but can’t afford to. We already have that solution: shared ownership.
However, millennials don’t know about shared ownership! A YouGov study found that only 40% of 18-24 year olds were aware of shared ownership, this is significantly less than those aged over 55 with 83% of them aware. When made aware of shared ownership, 1 in 4 of the millennials said they would be likely to use it.
We know who the customers of the future are and we’re building the right homes. They just need to be affordable. So as a sector, I’m asking for you to help raise awareness of shared ownership and give it the recognition it deserves to enable our customers of the future to realise their aspirations.