Challenging Times For Young Home Buyers
There has been a lot of talk as of late regarding the financial abilities of youngsters in the property market.
Specifically, those sub-30 year olds trying to get their hands on their first home are finding it much tougher than their peers from previous generations.
A number of reasons can be found why this may be the case.
Despite having interest rates at multi-decade lows and property prices receding for the past handful of years, these property price levels are still quite difficult to reach from an affordability point of view, given the intense employment situation and larger debt obligations (ie student loans), which make it tougher for financial institutions to approve bonds.
In contrast, the age group above that, being the 31-45 year olds, seems to have a more solid base to provide the financial backing (whether in form of deposit or affordability to pay off the bond) and are actually the ones topping the first-time buyer data, thanks to lower property prices and easier access to financing by the financial institutions.
Besides this above-mentioned Generation-X doing the buying, 2011 data imply that we have the Baby Boomer generation turning over their property as well and getting themselves another one. Whatever proceeds they generate from these sales, in combination with savings, allow for the Baby Boomers to up/downgrade their living circumstances.
Finally, the Deeds Office data suggest that barely 15% of first-time buyers were found in the sub-30 year old category. Looking across the pond in the United States, surveys indicate that almost 50% of youngsters find themselves worse off financially than their Baby Boomer parents. And only 20% actually believe they’re better off than their parents.
Bottom line: even though buyers can be found out there, the youngest home buyer category won’t be the one participating yet. So, despite preferring to own vs. rent, they will have to save longer and postpone their home ownership dreams before making the big step.