Younger Home Buyers Fret Over Cost
For buyers of homes in Britain and especially in London the cost as well as availability continues to deny the chances of getting on the ownership ladder. Research shows that buying a home is next to impossible for half of the employed people of the country because of the cost of living in a recent analysis in PropertyWire. And while local councils attempt to meet home affordability needs and lack of stock the desire to get on the property ladder is elusive.
Close Brothers in their well-being index reports show that 65% of the people who currently do not own homes still plan on trying to purchase one in the future and 47% say that their chances of buying a home are not possible.
The report says:
'Some 27% are spending more than 50% of their monthly income on housing costs, and 10% are spending over 70% while 13% say that their housing costs are unaffordable, rising to 19% for millennials.'
In the Close Brothers review the Office of National Statistics shows that the average cost of a home in Britain has risen by 270% over the past 20 years. As a result the age of buyers has been pushed back by eight years.
As for home prices the growth has now declined to its lowest rate since 2012 with the hope that if prices were to flatten and wage growth were to continue the chances of home ownership for new buyers will improve. A plan for savings is recommended for new buyers.
The report says:
'It believes it is a concern that four in 10 employees said they don’t know where to start when it comes to getting onto the housing ladder and this, more than anything, highlights the importance of offering employees the right advice to help them reach their long term savings goals.'
Almost 63% of employees expect the cost of their housing to increase should interest rates increase and 65% would be affected by increases in variable rate mortgages. Millennials at 76% could be the hardest hit with the exposure to increased housing costs at if rates increase.
Jeanette Makings, head of financial education at Close Brothers:
‘Housing is a key area of financial well-being, and it’s heartening to see that employees record a relatively strong score here. However, there seems to be a gap between perception and reality,’
‘While there’s confidence around affordability, a huge proportion of people’s salaries are going on housing costs. This makes saving for the future more difficult and contributes to the scale of uncertainty when it comes to taking the first step onto the property ladder.’
When it comes to fretting about housing affordability a persons well-being can be diminished.
Professor Cary Cooper, an expert in workplace well-being at the ALLIANCE Manchester Business School, University of Manchester:
‘Whether it be paying the rent, taking the leap as a first time buyer, or the impact of a variable interest rate in times of economic uncertainty, it’s vital that employees are comfortable and confident in how to approach their finances when it comes to housing.’