Marketing No Comments

Houses cost millennials 14 times more than baby boomers

Average property prices have risen twice as fast as wages in the UK over the past four decades, according to a new analysis of official figures.

Millennials looking to buy a home face prices that are now at least 14 times higher than when baby boomers tried to get on the property ladder in the late 1970s. But average wages have risen at less than half the pace of runaway house prices in recent decades, rising less than seven times over since 1979.

Analysis of official data by digital broker Mojo Mortgages and Yahoo Finance UK reveals the stark contrast between the generations in the property market.

A baby boomer born in the 1950s could buy the typical British home for about £16,800 in 1979, if they were able to get on the ladder as buyers often did in their 20s. The average home only cost just under four times the average pay packet, with the typical worker taking home around £4,200 a year.

But millennials looking to buy now, at an average age of 33, face a far greater gap between incomes and prices. The average home is now more than eight times higher than average wages.

The average property sold for around £235,300 last year, according to data from the Land Registry. Meanwhile typical pay packets came in at just over £29,000 last year, according to the Office for National Statistics (ONS).

British workers have seen a significant squeeze on pay particularly since the financial crisis, with younger workers among the hardest hit. But property prices continued to rise after the crash, and are now climbing once more after a recent slowdown.

The growing disparity helps explain why home ownership rates have been on a downward trend over the past decade, despite a recent uptick. Average buyers also now take on proportionally larger debts than previous generations, with only getting on the ladder because of competitive mortgage lending and historically low interest rates.

Mojo Mortgages combined the official data with estimates of spending habits, deposits and debts to show how getting a mortgage appears to have become harder over the decades.

The broker released the findings to mark the launch of its new online MortgageScore tool, aimed at showing would-be buyers how likely they are to get a mortgage.

Buyers are given a score out of 1,000. The tool suggests the average buyer in the 1970s would notch up 808 points, but chances have deteriorated with each decade. The typical worker in the 2000s scored 508, falling even further to an average of 410 last year.

Richard Hayes, CEO of Mojo Mortgages, said: “Home ownership is a top life goal, but for many first time buyers these days, it’s something they feel they won’t be able to achieve anytime soon.”

By Tom Belger

Source: Yahoo Finance UK

Marketing No Comments

Millennials aren’t the only ones struggling – older renters share their challenges finding decent housing

There are now more than 4.5m households living in the private rented sector across the UK – that’s more than doubled since the previous decade. The challenges of navigating this expensive and insecure housing market have fallen mainly on young people. In 2017, 35% of renters in the private sector were aged between 25 and 34.

Much attention has been given to the plight of millennials – aka “generation rent” – who research indicates are much less likely to own their own home than previous generations. Yet the number of older renters is also increasing – and much less is known about their experiences.

That’s why, as part of recent research for the UK Collaborative Centre for Housing Evidence, my colleagues and I investigated the experiences of older private renters – aged 35 to 54 years – from different parts of the UK, as they aim to find a decent home.

Shared experiences
Many of our research participants recounted their experiences of shared accommodation, forced moves, poor landlord practices and periods of homelessness. Many of their stories echoed those of “generation rent”; from reports of unaffordable rents, insecurity and poor quality housing, to difficulties in putting down roots and making a home.

Our research emphasised that these experiences are not restricted to young people. In fact, they are more common among low-income renters than any particular age group.

Even in middle-age, some of the tenants we spoke to still relied on the “bank of mum and dad”. Family support was vital in allowing them to pay their rent or save for a mortgage deposit. Some needed a relative to act as a guarantor on their rental contract. But not everyone has this resource to draw on, nor do they always want to ask their family for help.

Young people experiencing difficult living conditions often think that things will get better. By contrast, our research found that middle-aged renters had much less hope for the future. Some felt embarrassed and experienced a sense of “failure” because they could not realise their dream of home ownership.

Others had now aged themselves out of a mortgage. Lenders can be reluctant to approve loans that extend beyond retirement age when incomes drop. This is challenging for low-income households in particular, who – without the cushion of a private pension – may be unable to cover the repayments once retired.

Like younger renters in previous studies, the middle-aged renters we spoke to were frustrated at paying “someone else’s mortgage” – not least because it limited their ability to transform their own situation.

For some, the only way they could manage their budgets was to choose less desirable properties (often in poorer condition), which had lower rents, or to share with others. As other research has noted, such financial pressure can have negative effects on people’s mental health and well-being.

A different story
Older renters also face some different issues to their younger counterparts. Parents worried about how forced and unplanned moves would disrupt their children’s friendships and schooling. Being able to personalise a property and keep pets are also vital to making children feel settled and secure, yet not all landlords allow this.

Indeed, some landlords would not even allow children to live at their properties. Other parents (typically divorced dads) found themselves in shared accommodation that was not always appropriate for children to visit or stay in.

The practice of house sharing and renting a single room in a property is becoming more widespread. While for younger adults it has often been understood as a lifestyle choice, for the older renters in our study it was driven by economic constraint: they simply could not afford to live on their own.

Older age can also bring poor health, which may not be as prevalent among younger people. Yet the sector is not geared up to deal with the extra needs of ageing bodies. One participant who had a long-term health issue, described the challenges of sharing when mobility aids are needed and flatmates are not always understanding.

While there may be an opportunity for more socially minded private landlords to provide the support these tenants need, research suggests they are few and far between.

A deepening crisis?
The UK’s growing population of older private renters face distinct challenges, which could worsen the nation’s housing crisis. Accessing social housing remains challenging, while home ownership remains out of reach for many. Welfare reform, such as the housing benefit freeze, has excluded low-income renters from all but the cheapest properties.

Tenants of all ages want safe, secure and affordable homes. But without government action, that aspiration will remain unfulfilled. Reform of the private rented sector is important and is beginning to happen in different ways, in different parts of the UK. But legislation can only go so far.

Tenants must be made aware of their rights through public education campaigns. The government must fund local authorities to adequately resource enforcement action and tackle rogue landlords.

But above all else, the private rented sector must not be seen in isolation. To fix the broken housing market, there must be continued investment in affordable housing, and this must be matched by a political will to tackle the wider inequalities that are the root cause of poor housing.

By Kim McKee

Source: Yahoo Finance UK

Marketing No Comments

Why more millennials are staying put in small-town Britain

A new study shows a dramatic drop in millennials moving to areas with higher-paid jobs.

Young private renters in England are now only two-thirds as likely to move elsewhere for work as they were two decades ago, according to the Resolution Foundation think tank.

Young people are also less likely to change job at all than in the past, despite the rise of the gig economy and more temporary, flexible and insecure work.

The findings have been widely reported in a negative light, with concern over young people’s prospects and the impact on the UK economy.

The study says higher education, higher immigration, delayed parenthood and the rise of private renting should all tend to make younger people far more likely to move to find work. It says such mobility ‘should’ have risen 50% in the past two decades, but has actually dropped by a third.

There are good reasons to be alarmed—but there are also good reasons to see positives in the figures too.

The overall picture is a lot more complex than some doom-and-gloom coverage—such as the Guardian’s headline, ‘City ambitions out of reach.’

The risks for millennials and for business

The ‘Moving Matters’ report warns that rising rents in more productive areas like major cities are making it harder for younger people to afford to live there. This could be deterring them from moving to such areas at all.

It shows rents have risen faster than earnings in 165 local authorities in England, perhaps reflecting not only an overheated property market but also a squeeze on young people’s incomes particularly since the financial crisis.

It not only risks depriving young people of access to the cultural and social benefits of city life, but also of higher incomes, skills and the chance to get on the housing ladder.

The Resolution Foundation says swapping jobs to a different organisation is the best route to a higher salary, with a particularly high premium for workers moving to more productive areas.

“We know that job mobility is especially important at the start of one’s working life, when progression depends on testing out new roles and developing new skills,” the think tank says in a report released today.

Just as significantly, it notes the potential costs to organisations from a smaller pool of talent able or willing to move for work.

“An agile workforce is generally viewed as good not just for the individuals concerned, but also for the economy as workers ‘match’ more efficiently with business requirements,” it adds.

The positives of staying put in small-town Britain

Some might see young people staying put as a refection of the “snowflake” millennial attitude.

The study itself quotes the famously stern views of former Conservative minister Norman Tebbit when unemployment was soaring in the 1980s, who pointed out his dad simply got “on his bike” to find work elsewhere.

More recently, an Australian real estate boss urged millennials to stop buying expensive avocados on toast if they wanted to get on the housing ladder.

But there are signs in the latest report that some millennials may be quite happy staying put, with small-town Britain a less depressing place to live than several media reports suggest.

For one, a growing number of millennials are no longer forced to move to find any job at all through economic necessity.

The study says there are now more jobs available in many young people’s home towns, villages or cities than there were in the 1990s, when unemployment figures were much higher.

“It is easier to find at least some type of work in the vast majority of local authorities today than it was two decades ago,” it notes.

The pay rise young people can expect if they move to more productive areas is also far less than it used to be, according to the study. There is still a significant ‘wage premium’ from moving, but it has fallen in the past two decades.

The Resolution Foundation says the gap in living standards between areas with higher- and lower-paid jobs has narrowed. Average pay levels have risen faster than rents in lower-paid areas on average, whereas rents have risen faster than pay in better-paid areas.

The reality is that some millennials may be choosing, rather than forced, to stay in small-town Britain.

The report notes moving may mean losing access to family support with childcare, but it could also come down to the simple desire to stay close to friends, family and areas they know.

Not everyone is attracted to big city life. Perhaps some prefer quieter neighbourhoods, stronger community or larger homes to house shares in busy, unfamiliar places where cafes sell overpriced avocados on toast.

By Tom Belger

Source: Yahoo Finance UK

Marketing No Comments

Top Cities For Buy To Let Investments To Catch Millennials

The best cities for property investment to attract millennials have been uncovered in new research by credit experts TotallyMoney.

Millennials have been shown to be more likely to rent in the private sector, as the UK home ownership rate drops, an obvious target for by to let investors.

The research looked at 16 elements that are widely considered to be important to millennials and used them to rank 63 cities across the UK to reveal the best cities for millennials to live in.

The elements considered included property factors, such as the cost of a one-bedroom property to rent as well as to buy; cost-of-living factors, such as the cost of a cappuccino, gym membership, and meal for two; lifestyle factors, such as number of things to do, the population aged 0–17 and 18–29, and the percentage of Brexit remain voters; and most importantly, work factors, such as overtime hours, paid overtime, average weekly earnings, number of business start-ups, graduate hires, employment rates, and the number of young people on benefits.

Despite high living and property costs, London still makes second place in the list, due to high potential earning and the highest number of graduate hires.

However, first and third place go to Scottish cities Glasgow and Aberdeen respectively, where decent wages can be combined with lower than average property prices.

Bottom place went to Basildon in Essex, where just two per cent of graduates find work and the level of extra-curricular activities lagging way behind.

Spokesperson for credit experts TotallyMoney, James McCaffrey, said: ‘There are some things millennials have had to adjust to that haven’t been experienced by past generations, and with this comes an entirely different set of priorities. Rising house prices, stagnant wages, and Brexit are just some of the hurdles this generation have to get over.’

Rank City Average Weekly Earnings Business Start-Ups Per 10k Population Graduate Hires Employment Rate Average One-Bed Asking Prices Average One-Bed Asking Rents
1 Glasgow £526 48 5% 70% £90,466 £584
2 London £727 112 39% 74% £451,582 £1,633
3 Aberdeen £597 50 5% 74% £84,584 £478
4 Liverpool £512 51 6% 67% £102,029 £483
5 Bristol £547 60 6% 78% £184,736 £686
6 Gloucester £526 44 6% 80% £101,739 £443
7 Southampton £579 70 9% 76% £139,110 £584
8 Cambridge £609 55 2% 73% £225,239 £689
9 Cardiff £505 49 1% 69% £129,368 £493
10 Middlesbrough £477 41 2% 69% £62,183 £353

Source: Residential Landlord