29 Nov 2017 With Brexit anxiety, interest rates on the up and house prices expected to stall, the current property market is a minefield for anyone looking to buy in the UK. Despite this uncertain time, the desire for Brits to get on the property ladder is still strong, especially among those in their 20s.
A SpareRoom.co.uk survey of more than 5,000 British renters found that 86% of 20-somethings said they want to get on the property ladder, with 52% wanting to do so in their twenties. The vast majority of those (87%) said the main motivator is to pay into their own home, rather than lining their landlord’s pocket.
But the bank of mum and dad isn’t an option for most. 87% of 20-somethings said they intend to save a deposit from their salary, with just 1 in 3 anticipating help from parents.
With the average UK salary standing at £27,600 (£34,473 in London) and the average house deposit at £33,000 (£106,577 in London), people saving the average 5.9% of their income outside of London (around £108 a month) would need to do so for 25 years to accumulate a deposit. And those buying in London, saving an average of £131 a month, would need to save for a staggering 68 years to save up the deposit. This means buying in their twenties is an unachievable dream for most, even with the stamp duty relief announced in the recent Budget.
The findings uncover the extremity of the situation, with 93% of London flatsharers in their 20s saying they may have to leave the capital to buy a house and 87% across the UK are facing the prospect of leaving the town/city they call home in order to buy.
In contrast, people who are forty plus are far less bothered about owning. 29% said they don’t think owning is important, compared with 10% of people in their twenties and 15% of people in their thirties.
This piles on the pressure to find a high paying job to save a deposit and, even then, affordability is still a huge issue, as a quarter (25%) of twenty-somethings who bought and then sold a property said this was because they could no longer afford it.
Personal Finance expert Andrew Hagger from Moneycomms commented on the findings: “Buying a house isn’t a fool proof money maker. The UK’s property market is far less certain than just 18 months ago, and buyers are faced with rising inflation and interest rates. House prices are also stalling and in London there’s signs they’re falling. This may seem like good news to first time buyers but, if the trend continues, there’s a strong possibility people will end up trapped in negative equity.
“The financial pressure of buying a house isn’t just the deposit and the monthly mortgage repayments. If anything goes wrong, you have to pay for it and this can be a huge cost. Young people need to consider whether they can truly afford this without getting into difficulty. Buying a house in your twenties ties you to a long-term responsibility that can be tricky to get out of.
“Property can be a great investment, but you need to weigh up whether the potential profits currently outweigh the risk of ending up in negative equity. This is a decision that should not be rushed.”
Matt Hutchinson, director, SpareRoom comments: “Ownership is undeniably the wise long-term option for those who can afford it. But people in their twenties are putting too much unrealistic pressure on themselves to get on the property ladder. Renting ought to be the perfect choice in your twenties, leaving you flexible to move around, travel, change jobs or find a partner to settle down with. But we’ve become so terrified of missing out on the long term financial benefits of owning, buying feels like the only option.
“Brits have been force fed the notion by successive governments that buying is the right thing to do. But it’s not currently the realistic thing to do, leaving millions of people feeling locked out of financial security and like they’re a failure. That’s just plain wrong.”
If 82% of people think they’ll have to move to another area in order to buy then our housing market is failing us. Our homes should be secure, comfortable, affordable platforms for us to lead happy and productive lives. Instead they’ve become financial assets, investments, pensions and, for a whole generation, nothing more than a pipe dream.”
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