A recent Financial Times article highlighted a growing phenomenon of ‘buyer's remorse’ among homeowners, arguing that some people may have been better off renting and investing their money elsewhere. These are two rather different propositions.
There is nevertheless some truth in the article's observation that buying a first home has become more challenging for younger generations. First-time buyers are older than ever, with the average age now approaching the mid-thirties. Many are buying with partners, some already have children and many are purchasing properties that they hope will serve them for years rather than simply acting as a stepping stone.
Twenty or thirty years ago, many buyers were prepared to start with a small flat, build up equity and move on relatively quickly. Today, with house prices high and transaction costs significant, moving up the ladder can take much longer. Buyers understandably want more from their first home and, having stretched themselves financially to get there, may be more likely to question whether they made the right decision.
So yes, ‘buyer's remorse’ may have increased, but it is important to understand what people are regretting. Most reports of buyer's remorse relate to the property itself: paying too much, underestimating renovation costs, choosing the wrong location or realising that the house doesn't quite suit their needs. They are not expressions of regret about homeownership as a concept.
Indeed, it is difficult to find many homeowners who, having built up equity and gained the security of owning their own home, genuinely wish they had remained tenants indefinitely.
The Financial Times article also touched on the idea that some people might have become wealthier by remaining renters and investing their savings in the stock market instead. That may be true for a small number of financially sophisticated individuals, particularly those fortunate enough to be living rent-free with parents and able to invest substantial sums over a prolonged period. But for most people, this is simply not the reality.
The article also overlooks one of the fundamental advantages of homeownership: leverage. Most first-time buyers are using a relatively modest deposit to gain exposure to an asset worth several times that amount, while simultaneously repaying capital and building equity over time. For most households, there is simply no equivalent investment vehicle available on the same terms.
This is a vital point, because buying a home remains one of the most effective ways of building long-term wealth. IMLA's research on the intergenerational divide in housing, carried out in 2019, found that those who remained outside homeownership were on average more than £352,000 worse off over their lifetimes than those who got onto the housing ladder, even if there were no house price growth. Given rental inflation since then, today’s equivalent figure would be significantly higher. The cost of not buying can therefore be enormous.
The reason is straightforward, as we all know: every mortgage payment does two things, paying interest, and also repaying capital. Over time, borrowers steadily increase the share of their home that they own outright. Renters, by contrast, continue making housing payments indefinitely without building an asset of their own.
The benefits of homeownership also extend beyond financial returns. Owning your own home provides security and control. You cannot be asked to leave because your landlord wishes to sell the property or move back in. You are free to decorate, improve and adapt your home to suit your needs. Families can put down roots in their communities without the uncertainty that can accompany renting.
There is also an important long-term consideration. Homeownership acts as a hedge against rising housing costs, particularly in retirement. Someone who reaches retirement having paid off their mortgage faces a very different financial picture from someone who is still paying rent every month. Homeownership also creates options: housing wealth can be drawn on to supplement retirement income, provide a financial safety net if circumstances change or help children and grandchildren onto the property ladder. Renters simply do not have access to the same store of wealth.
None of this is to suggest that buying is always the right decision at every stage of life or that every property purchase works out perfectly. But increased buyer's remorse does not amount to a compelling argument against homeownership itself. For most households, homeownership remains the most realistic and effective route to building long-term wealth, achieving housing security and protecting themselves against rising housing costs in later life.
The aspiration to own a home has endured for generations for one very simple reason: despite its challenges and imperfections, for most people it still makes far more sense to buy than not to buy.
