People aged 18-34 are having to make sacrifices not experienced in previous generations to get onto the property ladder, according to a new study by Trussle.
The online mortgage broker asked millennials what compromises they had to make in order to buy their first home. One in five (16%) had to move back in with their parents, compared to just 5% of Generation X (age 35-54), while 17% had to take a second job.
Millennials are more than twice as likely to put off getting into a romantic relationship, twice as likely to delay having children, and 3.5 times as likely to sell their car, compared to the generation before them.
The findings show the impact of soaring house prices and slow wage growth on first-time buyers, with house prices now almost 15 times more expensive than they were 40 years ago. Since 1978, the average UK house prices has risen from £14,236 to £211,000, rising 1.382%. In comparison, the average annual UK salary has risen from £3.269 to just £26,500.
These figures underline the fact that for a lot of young people, the dream of home ownership is becoming increasingly unachievable and is no longer a top life goal. In fact, when asked about their top three life goals, 27% millennials are focused on travelling the world, 24% on having children and 24% on finding the perfect job. In comparison, buying a first home was the biggest life goal for both Generation X (36%) and Baby Boomers (42%).
The study of over 2,000 mortgage borrowers also showed that younger people are almost six times as likely to buy with a friend, and three times as likely to buy with a sibling compared to Generation X.
“The housing landscape has changed drastically since Generation X were buying their first homes,” said Ishaan Malhi, chief executive officer and founder of Trussle.
“House prices have risen almost twice as fast as wages over the past forty years and young people are being forced to put their lives on hold in a bid to join the property ladder.”
Malhi said the findings show just how unaffordable it currently is for first-time buyers and there needs to be ‘serious commitment to innovation’ to make home ownership more affordable and accessible to young people once again.
“Building new homes is not enough. We have seen new moves from the Government to enable renters to build credit, which is a step in the right direction to help young people,” he added.
“However, the major sticking point is that mortgage products are outdated. To fit the current landscape, lenders need to take a long-term view on an individual, taking into account earning trajectory to access affordability, and creating individual mortgage products based on personal circumstances.”