Following the release of a Halifax survey recently, experts are predicting the UK is moving away from home ownership being the default status of people in their thirties, towards a reality where only a very small fraction of this demographic is ever going to own their own home. The survey showed that only 5% of people 20-45 – the so-called Generation Rent – are making spending sacrifices right now in order to get on the housing ladder, while the remaining 95% have no spare cash to save, no incentive to save, or are failing to save despite trying. Based on these figures Halifax expects the UK to become overwhelmingly a nation of renters within the next 20 years.
This survey neither shocks nor even surprises me. With the average age of first time buyers now reaching the ripe old age of 37; the cost of university tuition fees rising, and the job prospects of young graduates looking as bleak as ever, why would anyone be thinking of buying a home?
In some ways I think this is a good thing, and is something that has needed to right itself for some time. Only a decade ago people as young as 22 were stretching themselves to get onto the property ladder, many of them with help from mum and dad, because it was an accepted given that home ownership was the holy grail. Why a 22 year old needs the financial stress, lack of job location flexibility and general tied-down reality that comes with owning a home, I was never quite sure. I think that 37 is, to be honest, a much more appropriate age for people to begin the home ownership process, because at that time in your life you are much more likely to have stable finances, a stable relationship and less requirement to be footloose and fancy free.
That said, the fact that many young people have no choice to be anything but a long-term renter in the current market is a problem. There is virtually no incentive to save with current interest rates being as low as they are; graduates are now doomed to spend the decade following university paying off substantial tuition debts, and there is nothing stopping the Baby Boomer generation – probably the luckiest generation of all time – sitting around and snapping up reasonably priced property so that they few people in the position to buy their first home are priced out of the market.
I think it’s important for the government to get behind first time buyers, possibly by making it very expensive for existing homeowners to buy up second and third homes. I also think that no matter what happens, the reality is that fewer and fewer people will probably make the leap over the next few years which does mean that there is a generation of people who will miss out on ever being homeowners; and for that reason, the government has to have a good hard look at the private rental market and do more to protect renters so that young people can live in urban areas at reasonable prices and be protected from the whims of their landlords.
Are you part of Generation Rent? What would you like happen to change this?