Will Millennials Ever Be Able To Buy A House?
If you’re aged in your twenties or early thirties, it’s likely the idea of owning your own home is a nice one, but seemingly unrealistic.
These days, purchasing a home of your own is an expensive ordeal and the price of property just isn’t as relative to average earnings as it once was. That is especially so if you want to live in the likes of London.
Some reports go as far as to say that a vast portion of millennials (those aged 20-35) will never own their own home. According to research by Thinktank, for example, it is thought that as many as one in three of Britain’s millennial generation will never own property. Instead, individuals in this age bracket (around 14 million of them!) will likely forever live and raise their families in privately rented accommodation, still renting into retirement, and passing very little in the way of assets down to their children.
That’s pretty staggering (and depressing)!
At the same time, many millennials are telling us that they don’t, in fact, want to own property.
Data by CEBR and smart money app Yolt recently found that only two in five millennials see owning a home as a long-term financial goal. Millennials are saving money from their pay cheques each month, but it’s to put towards other important life milestones such as starting a family, as opposed to the traditional dream of purchasing a house.
Whether this is a symptom of the increasingly impenetrable housing market or the result of new, modern ideas on living (or a combination of both) is of course debatable.
One thing we are sure of here at GWlegal though is the fact that younger generations should have the option of buying a home of their own.
We also believe that everybody, regardless of what generation they belong to, should consider the pros and cons of any major financial commitment, such as purchasing property, before setting anything in stone. Some of these include...
The advantages of owning your own home
- Stability - You never know when your rental situation could change, quite possibly for the worse. Perhaps your landlord will decide to sell the flat you and your partner so dearly love. Maybe you’ll fall pregnant and need a bigger place, but struggle to find something appropriate in today’s increasingly competitive rental market. In fact, one of the main reasons individuals in the UK become homeless is due to being evicted from a rental property. Owning a property (given you’re in a position to comfortably repay the mortgage and so forth) can be a massive weight off the shoulders.
- Predictability - Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.
- Investment prospects - Property remains one of the most reliable investments you can make. Generally, the value of property rises, so chances are you’ll make money on your purchase in the long-run. Investing in property as a landlord is now also possible for younger (and even first-time) buyers, due to new mortgages available for FTBs wanting to enter the buy-to-let market (previously such a product did not exist). Being a landlord can fund lifestyle aspirations (such as travel, starting a family) or help you save towards buying your own dream home, which may be in a more desirable location, larger, etc than your rental property.
- Privacy - No more annoying visits from landlords or dodgy landlord-appointed “handymen” who are in fact the property owners’ brother-in-law staging as a plumber or painter!
- Independence - Start painting like crazy, as you’ll now be able to decorate and renovate your home however you want without having to worry about losing your rental deposit.
- Community - People who own their own homes usually feel more settled and ‘at home’ in their community. You’ll feel more pride in yourself and the area in which you live and feel more motivated to get involved with whatever’s going on locally.
The disadvantages of purchasing your own home
- The commitment - Obviously, homeownership is a long-term financial commitment that you’ll need to be prepared for. It’s also a lifestyle commitment in that you’ll be more rooted to wherever you decide to buy your property, as opposed to somebody who rents.
- Responsibility - In addition to the financial responsibility, owning your own home means you’ll need to maintain it too. Fixing a broken toilet or replacing a furnance can be costly and time-consuming ventures. That’s not to mention the grass that needs mowing or that hallway that needs repainting!
- A less flexible lifestyle - When you factor in the money you spend on your house deposit, the conveyancing process and all those moving in costs, fancy dinners out, exotic holidays and designer clothing might be out of the question for some time, so you’ll need to get used to a more frugal way of living at least for a while. It’s possible also that the value of your property won’t increase for several years, so it may be in your best interest not to sell-up in the foreseeable future, which could be an issue if you don’t end up liking your new area.
Alternate living arrangements
You’ve carefully considered the pros and cons of home ownership and have decided that purchasing a home of your own is, in fact, the right move for you. There’s just one issue - you simply can’t afford it (or, in most cases, the massive deposit required).
As such, some millennials and first-time buyers are taking unconventional steps to jump on the housing ladder.
Data by UK residential and leisure mooring provider BWML recently suggesteds that as many as 51% of millennials are willing to tackle the problem of inaffordable housing deposits by purchasing an alternative dwelling, over a house or flat, to get on the property ladder.
These ‘alternative dwellings’ include caravans, houseboats or trailers.
In addition to the affordability element, many survey respondents said they were attracted to the idea of alternative living due to the health and well-being benefits associated with this simpler lifestyle (25%), the lesser environmental impact (15%) and the ease of travel when owning an alternative home (10%).
Advice for millennials wanting to jump on the housing ladder
- The most useful article ever written for FTBs (according to us!)
- Why It's The Right Time For FTBs To Buy
- Buying A Home: House Viewing Tips
So what’s the answer? Will millennials ever be able to buy a home?
Yes, we believe so.
These days, many millennials may need to employ a little bit of creativity to get started, but the dream of homeownership definitely can become a reality with the right help.
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Content correct at time of publication.