On LinkedIn recently, Olamide Majekodunmi, Founder of All Things Money, exacerbated over the repeated narrative that young people are unable to purchase their first home because they 'spend too much'. This was following a publication from the Guardian entitled "Half of UK adults think young people spend too much to buy a home". The article draws in research to support the fact that;
Almost half all UK adults believe the collapse in home-buying among young people is caused by them spending too much on takeaway food and coffees, mobile phones, holidays and Netflix, a study on generational divides has shown.
The research by academics at King’s College London found that while such opinions often crossed age bands, the increasing tendency for younger people to live in cities and older ones elsewhere risked increasing splits between age bands.
The research also discovered that myths about housing affordability were common among younger people, something the researchers said could be caused in part because of much-reported assertions about wreckless twentysomethings spending habits, floated by commentators such as Kirstie Allsopp. (We shared a thread on this on our #go2mortgages instagram about Kirstie Allsopp's bold generalisation that young people would be able to afford a house if they stopped eating avocados, spent less time at the gym and cancelled their Netflix subscription... we had some tasty responses!)
So, is what baby boomers think the truth? Overall, 48% of people agreed with a statement saying young people could not afford to buy a home because of such consumer spending.
HOWEVER, the Guardian report notes that this is factually incorrect given the rise in the price-to-earnings ratio for properties, and the challenge of putting together a deposit.
Olamide (along with a HEAP of other people!) support this.
Arguably, the real issue is due to:
- Extortionate house prices
- Salaries that are not growing in line with inflation
In Todays Conveyancer, Jamie Lennox shares;
'The average price of property coming to market has hit yet another new record for a fifth consecutive month, rising by 0.3% (+£1,113) to £368,614, according to Rightmove’s latest House Price Index. This is the smallest increase since January, as the pace of price rises starts to slow.
Despite five consecutive interest rate rises and the increasing cost of living, buyer demand for each available property remains very strong, being more than double (+113%) the pre-pandemic five-year May average. However, Rightmove are seeing signs that this is continuing to ease, with this measure down by 8% in May compared to April.
After a very strong first half of the year, it is likely that affordability constraints will have a greater influence on market behaviour in the months ahead, with further interest rate rises anticipated. This, alongside more choice coming onto the market for buyers and the usual seasonal variations, means that there are likely to be some month-on-month price falls during the second half of the year. We expect this to bring house price growth by the end of the year to around the 5% we originally predicted in December.'
This all seemingly backs up Olamide's point that house prices are high and just keep getting higher.
How can you move forward if you are house hunting?
When we caught up with Move Sales & Lettings in Q1 2022 we 'predicted' that the supply/demand might cause this log-jam. In our 'coffee and a chat' video, we list the best ways to navigate the property market as a young person (or any age!) looking to get on the property ladder. As mortgage advisors, our advice is to get your ducks in a row, so you're ready to go when a property comes on the market. Speak to a mortgage broker (like us!) about your situation and get your information aligned so you can hit the ground running when the time comes.
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