How millennial saving priorities may keep 'generation rent' off the housing ladder
The description of millennials as 'generation rent' has prompted much debate about what should be done to help make it easier for this demographic to get on the property ladder. At the same time, residential landlords and agents will be aware of the need to gear their marketing and property portfolios towards the needs of this group.
A key question that may be posed is whether, in the event of a sudden and favourable change in circumstances, the number of millennials who rent would swiftly plunge as large numbers head off to buy homes instead.
A game-changer for first-time buyers?
This scenario is not necessarily hypothetical; the National Landlords' Association (NLA) recently published survey data suggesting 380,000 landlords are planning to divest residential property in the next year. Most of these will be terraced homes or flats - among the most popular housing types for first-time buyers. Moreover, only seven per cent of the landlords seeking to divest properties intend to sell to other landlords.
On the face of it, this could offer aspiring first-time buyers abundant opportunities. The NLA suggested this will indeed be the case, while warning that the situation would be bad news for those who do rent, as the supply of available homes will consequently dwindle.
House deposits not a top millennial priority
However, a new survey of how millennials save money by cashback shopping website TopCashback.co.uk has provided a good reason to suggest this will not be the case.
On the one hand, it found that their desire for homeownership is strong, with 95 per cent wanting to do so at some point. However, expectations fall well short of this figure; only 39 per cent are sure they will be able to buy one day, 26 per cent merely hope they will and 31 per cent think they will never be able to do so.
This pessimism appears to be reflected in millennial saving priorities. If there was a widespread anticipation that homeownership was an attainable goal in the near future, it would logically follow that most of this group would be acting to pursue this aim by making saving for a deposit one of their chief aims.
Instead, however, only 35 per cent of those surveyed said they were saving for a deposit, which placed it fifth on the list of savings priorities. By comparison, the most popular reason for saving was the establishment of a fund for emergencies, which 51 per cent were putting money away for. Other reasons for saving that were given precedence over a housing deposit included building up a savings cushion, financial freedom and funds for travel and holidays.
Renting not caused by cultural change
Perhaps as interesting were some of the other priorities mentioned. Saving for starting a family was ninth on the list, with just 14 per cent giving this priority, while wedding saving was tenth on 13 per cent. Like buying a house, these are also life goals that people have been increasingly undertaking at older ages than previous generations. Being a married homeowner with a family by the age of 30 used to be commonplace. Now it is unusual, and increasingly so.
However, some of these trends are more the result of changing social attitudes than others. For instance, falling marriage numbers partly reflect the growing number of people seeing cohabitation as a viable alternative. By contrast, the survey finding that most millennials would prefer to own a home suggest there has been no equivalent move towards the kind of renting culture seen in some European countries.
Nonetheless, the take-home message of the TopCashback.co.uk survey is clear; they might want to own their own homes, but most millennials have evidently come to the conclusion that they are better off saving for other things. This means that, even if the property market takes a dramatic and favourable turn, the majority would not be in a position to take advantage and leave renting behind.
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