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  • Buy-to-Let

    Property buying habits of millennials



    Just one in ten millennials planning to get a mortgage in the next 12 months

    • The research found that a third of millennials could never afford to live in a big city

    • Just a quarter of the age group currently has a mortgage

    Just over one in ten (11%) millennials are planning to take out a mortgage in the next year, despite a third (33%) claiming they are currently saving for a property, according to The Nottingham.

    The building society analysed YouGov Profiles data to uncover the current living arrangements of young people aged 20 and 37 and their attitudes to buying their first home, as well as delving into the attitudes towards housing and the economy.

    With the cost of a UK house averaging £226,000 it is no surprise that many are choosing non-traditional routes to get onto the property ladder, and the research indicated that millennials are rejecting inflated city prices and central locations in favour of a location where they can feel at home.

    The profiles data found that 64% of the age group agree that overall you get a better quality of life in the country, and a third claim they could never live in a big city.

    A sense of community is also key when looking for their first home, with over half (52%) wishing there were more community activities in their area. Only 20% believe there is a better sense of community in cities, indicating that the generation will be increasingly moving away from central city properties, focusing on more rural locations.

    Looking at housing situations of the generation, around a quarter (26%) of millennials are currently living with parents, and they are the age group most likely to be living with friends or housemates (11% compared to 4% of the national population). Just one in eight (12%) currently live rent-free with parents, friends or family.

    Despite the uncertainty around our departure from the EU impacting the housing market and inflation, millennials are feeling optimistic about their finances, with 38% tending to agree that they are ‘better off’ now than they were a year ago.

    Looking to the future, they are also the most positive age group about the next year, with about a third (32%) admitting they think their household financial situation will be better over the next 12 months, compared to just a fifth (20%) of the national population. Millennials are also most likely to be prioritising saving for the future (49%) over paying off debts (34%).

    Interestingly, 35% of millennials claim they take into account news about the economy before making big purchases, suggesting Brexit could be a major factor into why just 11% are planning to take out a mortgage over the next year.

    Just under one in four (23%) currently own a property with a mortgage, and just 3% own a property outright. Of those who have a mortgage, only one (11%) used a mortgage broker.

    Ben Osgood, Senior Mortgage Manager at The Nottingham, said: “Getting onto the property ladder can be a daunting experience, particularly in periods of economic uncertainty. People regularly compare a range of providers when it comes to their energy and insurance so it’s surprising the research found that just one in ten millennial house owners used a mortgage broker, meaning they don’t do the same for their mortgage. Especially considering it’s likely to be their most expensive outgoing.”

    “That’s why we introduced whole of market mortgage comparison for our members provided by Nottingham Mortgage Services. It’s important to us they leave with the right mortgage, regardless of provider. Getting the right advice and product should help the millennial generation feel more confident about their house purchase and know they have a mortgage that suits them, giving them the confidence to make that first leap.”

    To discover more millennial house buying trends, visit: https://www.thenottingham.com/news/house...ends-2019/

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    In practice around 80% of UK pop live in or close to larger towns/cities as that is where the jobs are - though most of today's workers will have a fairly long commute to work unlike 40/50 yrs back when many workers had pretty local jobs.

    Whilst average property price may be £226k - FTBs typically pay around 60% of local average price for their first home.

    CML data for Greater London FTBs shows average price paid £328k and nationally £142k

    The biggest hurdle I see for today's FTBs is that flat wage growth may well prevent trading up from the starter home to a family home.

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    Last year i had an application from a young couple who between them earnt more than the other 3 flats occupants combined. I like long term tenants and voiced my concern that they would just use the flat as a base for house hunting.
    They are both mid 30’s, they were totally bemused by the suggestion, they’d moved to the kent coast to get out of london and were working from home or commuting, they pointed out that whilst yes they earnt ( by margate standards very good money) and the rent here is much cheaper than they were used to,

    They both earn enough to trigger student loan repayments
    Despite working from home a few days a week both need a 7k season ticket
    Both pay 40% tax
    Thye’re used to doing what they want when they want.

    The idea of tying themselves to a mortgage and having to save for a deposit was not something that crossed their minds or that of their peer group.

    They are now expecting a baby and whilst cliaming they intend to stay in the flat , seeing as its 2nd floor in a period conversion i rather think the practicalities of a newborn will change their thinking, as to wether at that point they choose to buy or rent elsewhere , who knows.
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    Such an interesting thread Vanessa. I really enjoyed reading this and seeing how the viewpoints of those younger are changing compared to older people’s viewpoints when they were that age. There is a definite shift in viewpoints about buying property and its so interesting to watch it develop and change.

    I’d also say that priorities for a lot of the younger generation has changed as well. As the focus is not as much about buying and owning a property anymore, and more about where they live and what it’s like. As you said the millennials find living in big cities less exciting prospect and they tend to find better quality of life in the country.

    Thank you so much for sharing!

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