by Mark Johnston
It seems that in the current climate and for the foreseeable future property ownership will be but a ‘pipe dream’ for the majority of young adults. The root cause amongst others is the lack of supply; there are just not enough properties for people to live in!
Renting was once the default option for people who were saving to own their own homes, this is now a luxury.
Increasing rents and also the credit squeeze that has seen most lenders move away from offering mortgages at high loan to values (LTV) has meant that more and more young adults are still living in their parent’s homes.
Clare Francis, a spokesperson at moneysupermarket.com, said “the housing market has been hugely affected by the credit crunch and economic downturn and first time buyers have been hit the hardest”.
According to a report from the Office of National Statistics (ONS) there has been a 20% increase in young adults living with their parents over the last 15 years. The report shows that almost 3 million adults between 20 and 34 still live at home.
These figures also coincide with the rocketing average house prices, which have increased 40% between 2002 and 2011.
Londonhas the lowest percentage of young adults still living at home, this is largely due to house sharing being more common there and also the capital attracts more young workers away from their home locations.
Northern Irelandhowever has the largest amount of young adults living at home, firstly because more students remain at home whilst studying and secondly because there is more ‘traditional values’ here.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said “lenders are now demanding hefty deposits and therefore this situation is only going to get worse”.
Due to higher university fees and increased unemployment many parents are now also finding themselves funding their children for a lot longer that they were expecting to.
Recent research from Standard Life found that over half of all parents saw it as ‘their duty’ to support their grown up children financially.
However, because of this it seems that now parents are inadvertently placing their adult children at a financial disadvantage by taking out credit on their behalf.
Noodle, the free credit report service, warns that by putting credit agreements, mobile phone contracts, credit cards and even mortgages in their own names they are preventing their children from developing a credit record.
As parents help their children out it has now created an estimated 7 million “credit virgins”, which makes it more difficult for them in the future to take out loans or secure mortgages, even if they can afford them.
Angus Hanton, co-founder of the Intergenerational Foundation, suggested that “government can not continue to leave young peoples housing and employment prospects to a market that is stacked in favour of the older generation”.
Story link - The Generation ‘Locked Out’ of the Property Market
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