The U.K. is facing such a steep cost of living crisis that it's costing British Zoomers and millennials their ability to buy homes. In fact, they've earned a new monicker now that many have been forced to move back into Hotel Mom—or in this case Mum.
Real estate listings company Zoopla dubbed this group of young adults as "Guppies"—a nod to the predicament that they are "giving up on property." Zoopla's data shows that not even a quarter of Brits under the age of 40 actually owns a home. And among those who don't, a full 42% have stopped aspiring to own their four walls entirely for at least the next 10 years and will likely remain living under the roof of their parents.
The situation is a little more dire among Gen Z, who are likely studying or in their early careers. Fifty one percent of those aged between 20 and 24 years from England and Wales chose to move back, according to 2021 census data published Wednesday. That's up from 44% in the 2011 census for the same age group
“We're in a really, really tough landscape at the moment for a number of reasons," Daniel Copley, consumer expert at Zoopla, told Fortune. "You've got a bit of a cocktail of house price growth, relative salary stagnation, cost of living pressures and incredibly high mortgage rates."
The decision to buy homes isn't just a tough one for low-earners or early career professionals. Even those making a higher income of £60,000 ($76,400) a year are defecting to the Guppies camp.
Zoopla points out that the current home-buying attitudes are in stark contrast to the young urban professionals of the Eighties and Nineties, labeled "Yuppies," who could comfortably buy homes with what they earn.
But times are different now. People currently in the market for homes are facing multiple pressures at once, and it could take years to shake off the impact those have on home-buying.
The increase feels especially painful for the average person because wages haven't kept pace with the rate of house price increases. Just between 2012 and 2021, house prices rose 53% while wages grew only 19%, the Telegraph reported.
Is there a way out for the Guppies?
While home ownership looks like an uphill challenge among young adults generally, they are finding creative ways to work around their constraints.
For instance, they are relaxing their preferences on the areas they'd want to live in or the condition in which they'd expect to buy homes. Among those below 40 years who are looking to buy their first homes, seven in 10 people said they made compromises in their home search.
Others have also taken unconventional paths to purchase property—such as buying a place with friends, colleagues or siblings. Some are even open to buying "near derelict" homes and then refurbishing them, Zoopla found.
"The thing about first-time buyers is even though they're under such tremendous pressure, they're really really resilient," Copley said, adding that they make up 34% of the market of home buyers. "I think we've seen them get inventive."
The rise of Guppies reflects the many hurdles in home ownership among the younger generation. It also means that people keen on buying homes need to go to great lengths to shore up their finances in preparation for the investment.
"First time home buyers have to emerge from a really tough rental market and they have to scrape that deposit together," Copley said. With mortgage rates being at a high compared to the last 15 years, the financial commitment could be significant unless young Brits are helped by their parents or grandparents.
Many of the millennials who have actually managed to buy homes recently have largely one lender to thank—the "Bank of Mum and Dad", or "Bomad" for short. Financial support from parents has given young professionals a significant boost, helping them achieve this milestone 10 years in advance, according to data from the Bank of England.
Without the aid "Bomad" has provided, it could take people much longer to buy homes of comparable value, forcing them to buy cheaper homes and entrenching greater levels of income inequality in the country.
“Those who have had help from their parents put down a deposit twice as large, bought bigger first homes, and had smaller mortgage payments than those who did not,” Bank of England analyst May Rostom wrote last month.
Those unable to fall back on the generous aid of mum and dad when buying a home may have little alternative but staying with the parents and further swell the growing U.K. ranks of young "Guppies".
