I recently appeared on the BBC’s Breakfast Show to discuss housing affordability and the changing balance of home owners and renters. The discussion was extremely enjoyable so I thought I’d take the time to note down a few of my thoughts and to expand on what is a very interesting and potentially impactful topic.
Population trends are continually evolving as a huge variety of factors affect the way we live our lives. These can be anything from economic to technological changes. Brands need to understand how people live their lives and be ready to either adapt to or capitalise on changing trends.
Most of marketing revolves around the customer experience and making it easier and more relevant for customers. To be able to do this brands need to be aware of changes so they can get a better picture of who their customers are, what their preferences are and what matters to them
On BBC Breakfast we were discussing the question of housing and affordability, based on some recent Experian research into the ability of people to afford to buy houses where they lived and the resulting numbers of people renting. The research confirmed what many suspect – an increasing number of people simply cannot afford to buy a home where they live.
The heat map below shows what proportion of households cannot afford to buy on the first rung of the local housing ladder. It compares the local cost of buying for the bottom 10 per cent of prices of local properties with the income of each household and shows the proportion that cannot afford this price.
It’s probably no surprise that in London some 54 per cent of residents cannot afford to buy a property where they live. Nationally, that percentage falls, but still some 37 per cent of all the people in the UK are now living in rented accommodation.
Why are people unable to afford to buy where they live?
Rising house prices are clearly a factor. The latest figures from Experian’s Property Index show that between April and June 2014, the number of homes that entered the market for sale valued at over £500k rose by almost a third (30 per cent), while houses for sale in the second highest price band (£250k to £500k) rose by 16 per cent over the last 12 months. For both price bands, this is the highest level since 2010.
What we are seeing is a changing landscape, with many younger professional families moving outside of the main city centres looking for more affordable property, creating new commuter hubs in more rural locations. Things like rising train fares then become a bigger issue for these groups, but with a longer commute they can buy their own home – which is still a priority for many.
Those who choose to stay in the town centres are more than likely to be renting – if you consider that the average deposit for first time buyers in London is around £80,000 you’ll get an idea of the challenge people face trying to purchase property in the capital.
Ruburbs – Rural Suburbs
An indicator of this change, and a trend which seemed to catch the imagination of the BBC presenters, is the growth of what we have coined ‘ruburbs’, which came from a piece of work we did a few years ago. Using census data and our own data sources we looked to see how far people traveled for work.
What we saw led us to come up with the concept of ruburbs – rural suburbs – which saw people living a suburban life but further and further out of the major cities. They still worked in the major cities but clearly rising prices were pushing them out.
What does this mean for brands?
Brands need to know their customers in order to tailor their communications and services to suit them. Customer experience is the major battleground of modern marketing and understanding your customers is the crucial first step.
So as a brand if you’re looking to open a store in a specific place or want to focus a particular advertising campaign on particular geographic areas, make sure you know who lives there and the sort of person they are. Different people have different wants, desires and needs depending on their lifestyles. Keeping abreast of change is one thing but sophisticated customer analysis is necessary to make sure you are reaching the right people with the right messages.
Ruburbs and the household affordability research are just two examples of the multitude of insights Experian Marketing Services can provide using its range of insight tools and platforms – including the Mosaic Segmentation tool.
Experian Marketing Services helps bring brands and customers closer together through detailed consumer insights and cross-channel marketing solutions.
Read more about Mosaic here.