The shake up in the housing market from the fallout of the credit crunch three years ago looks like it will have long term implications for first time buyers. A new study has polled thousands of 20-45 year olds who currently rent their home for their views on the housing market and where they stand within it. Not surprisingly the outlook is pretty grim for a variety of reasons we’ll go into a bit later in the article but what is surprising is the long term view these people have on how their generation will cope getting on to the property ladder at all.
Traditionally other EU states such as France have considered themselves to be a nation of renters whilst the British have proudly proclaimed themselves to be a nation of home owners. This however is not how the younger generation sees it. Admittedly the new poll has a very wide age range as a lot changes between 20 and 45 years of age but never the less the attitude of these people to saving up for a deposit for a house is less than optimistic.
Half of 20 to 45 year olds think that Britain will become a nation of renters within a generation. According to research by several prominent mortgage lenders just 14% of those that don’t own a home are actively saving for a deposit and so the responsibility to engage youngsters in home ownership is falling to the parents.
Many commentators observe the lack of those saving for a deposit is not due to a lack of jobs though current unemployement is high. Most of those with jobs but without their own home may well be paying high rents but this does not excuse the fact that many don’t save anything at all, often because it seems like ‘a drop in the ocean’ compared to extortionate house prices. Cynics say the lack of savers is due to the culture of fashionable living where it is better to have the latest jeans or smart phone than a cheque paid in to a savings account.
Back to the nest...
There are some startling statistics to accompany the study. Of the 20-45 year olds taking part, 35% have no savings at all, 27% have savings of less than £3000. Those with savings average £9,500, with men averaging over £12000 and women falling behind on £6400. With the average house costing about £150,000 the customary 10% deposit to purchase the average house leaves a large gap to be filled from somewhere.
The upshot of all of this is that when asked about the future nearly half say they do not believe they will ever be able to own a home with a quarter admitting that they don’t even want to. Some young renters are therefore being pushed back to live with their parents when they do decide to start saving and some are even doing it because they simply can’t afford the high rents. However with the unbelievably high rates for inheritance tax this is not a good long term plan if any were planning on home ownership by simply out living their folks!
Images courtesy of sxc.hu