The big property story here in the UK over the last few days has been the plight of young would-be homeowners who can’t get on the property ladder. But home-ownership is not that difficult – if buyers become more flexible.
Key content of this blog: first time buyers, millennials, young home buyers, people saving for a deposit, people living in unaffordable areas, moving out of London and the South East, the Northern Powerhouse.
The big property story here in the UK over the last few days has been the plight of the young would-be homeowners who can’t get on the property ladder.
But home-ownership is not that difficult – if buyers become more flexible.
Research carried out by the Institute for Fiscal Studies revealed that the largest fall in home ownership has been among middle income 25-34 year olds, often known as millennials.
HUGE DROP IN HOME OWNERSHIP
In 1995-96, 65% of this group were homeowners, today that figure has plummeted to only 27%. That is a truly dramatic fall over 20 years.
THE RESEARCH CONFIRMED SOMETHING THAT IS WIDELY KNOWN; HOME OWNERSHIP, IN THE UK, AS IN COUNTRIES WITH A SIMILAR ECONOMY, IS FALLING.
Commentators often say that millennials have a choice of opting for the affordability (and flexibility) of renting or making difficult choices in order to buy – for instance, choosing not to have children.
What I find interesting is that there is rarely mention of relocating to more affordable areas of the country with a good quality of life and a good supply of jobs.
With the ever-widening gap between wages and house prices, potential buyers increasingly need to question their desire to stay in areas where they are likely to be a tenant for life.
Everyone understands that most people prefer to live and work in the area they were born and bred – where their friends and family are – especially if that is a rich and prosperous area like London or the South East.
Sure it is great to stay in London or the South East where wages are high.
However, increasingly, southerners will have to heed the calculations which say they will be financially better off living somewhere else in the country, where they will earn less but housing will be decisively cheaper.
Of course London Mayor Khan is not going to thank me for any of this – suggesting home-hunting millennials should seriously consider leaving London.
However, everyone needs to get real.
I always smile when London lovers like Mayor Khan and the London Evening Standard big up London and tell everybody what a great world city it is and how it can keep on growing forever.
The truth is London is full – overflowing – housing demand is greater than supply. That is why property prices are so high. Rudimentary economics. Building more properties in London will simply encourage more people to move there and push prices even higher.
TIME FOR PEOPLE TO GET ON THEIR BIKES AGAIN
It really is time for government to be honest with the people and tell them the truth…just like they have become flexible in their work habits in the gig economy, they need to be flexible about where they live. However, don’t hold your breath.
Many years ago when hard-line PM Margaret Thatcher suggested at a time of high unemployment that the unemployed should ‘get on their bikes’ and look for work in other parts of the country, she got a serious kicking from many political quarters.
And rightly so. The Iron Lady was wrong about expecting people to up sticks and move to a new town without work at a time when there was no work anywhere.
But is it so crazy these days to suggest that would-be homeowners unable to buy in the area of their choice should seriously consider relocating to cheaper areas with jobs?
Bad, lazy or mischievous politicians talk all the time about a shortage of housing. However, the reality is that there are many parts of the country where there is plenty of housing, at affordable prices.
The real issue is a shortage of housing in areas of high demand, not merely in London and the South East but in countless thriving villages, towns and districts right across the country.
IT’S GETTING BETTER UP NORTH
Thankfully, it does seem that politicians are finally latching onto realistic solutions to the affordability crisis.
The HS2 high speed train service will reduce the London to Manchester journey time by an hour.
It does seem that there are finally genuine efforts to bring about the much derided ‘Northern Powerhouse’ by linking great northern cities like Liverpool, Manchester and Leeds (plus Wales) to form a counterweight to the economic behemoth which is London.
YOU CAN SEE THAT THE NORTHERN POWERHOUSE IS NOT JUST HOT AIR BY GOING TO THE NORTHERN POWERHOUSE WEBSITE.
However long it takes, it does seem that big infrastructure spending (if it grows and continues) will eventually make the North, Midlands and Wales worthy rivals to London and the South East.
50 Ways To Put Together A Deposit in 6 Months
WHAT ABOUT NOW?
That is all very well for the future, you may say – but what about now?
There is no painless solution for anyone desperate to own their own home if they are residing in an area which is by definition unaffordable to them.
In my book QUICK HOUSE DEPOSIT, I argue that the lack of a deposit is often the biggest hurdle to home ownership. Many would-be buyers can afford the monthly mortgage but struggle to raise a deposit. My book identifies 50 ways to raise a deposit quickly.
FURTHER THERE ARE TWO BIG GOVERNMENT HELP TO BUY SCHEMES AVAILABLE TO BUYERS.
Shared ownership allows buyers to own a qualifying property by buying as little as 25% of its value, paying rent on the part they don’t own.
The Help to Buy equity loan scheme offers buyers a preferential government loan of up to 20% of the property price (40% in the London area) on qualifying new built properties priced at up £600,000.
The number of millennials unable to buy their own home will decrease further if they continue to choose the rental option rather than make the real sacrifices they must make to become homeowners.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com