Millennials don’t buy property or cars, they prefer to walk and they have better things to spend their money on than bricks and mortar – like coffee flavourings and beard grooming products.
It’s a scripted truism of modern dinner party conversations among people now in their thirties and early forties that the old capitalist model of owner occupation is just so 20th century.
Rather than buying a home and signing up to a 25-year-mortgage they prefer a more freewheeling approach, like subscribing to a holistic housing solution app they downloaded on their iPhone 25X.
Meanwhile, back in the real world, the real reason millennials are not snapping up two-bedroom semis like their parents did before them is largely down to affordability.
A new study published this week revealed that this generation of first-time buyers are likely to pay two thirds more in housing costs throughout their lifetimes than their Baby Boomer and Generation X and Y counterparts.
Despite record low interest rates making things easier for those already on the property ladder, aspiring first-rungers have had to endure rapid house price rises, often lower availability of housing stock and tighter credit conditions, according to the Resolution Foundation report.
The study showed that a typical UK first-time buyer in the mid-1970s would have paid around £90,000 in net interest throughout the lifetime of their mortgage, compared with £150,000 for a first-time buyer now.
Bringing the different factors together, the report found the total cost of buying a first-time property outright has increased by about two-thirds, from £154,000 back in 1974 to £254,000 now.
The average deposit required to get on the property ladder has tripled in real terms over the past 20 years, from just shy of £11,000 in 2000, to £33,000 in 2020.
While a family headed by someone born in the early 1970s, with typical income levels, would have saved enough for a first-time deposit by the age of 22, it will take a family headed by someone born in 2002 up to their 36th birthday to save enough for a deposit.
The notion of a subscription-based housing provider, similar to the Netflix model for online content, might sound far-fetched, but it could be a feature of the future property market if post-2008 trends in the US take hold here.
The mass repossession of homes from mortgage defaulters by institutional investors, such as private equity companies, has led to the creation of a new breed of corporate landlord.
A recent New York Times article on the ‘$60bn housing grab by Wall Street’ noted that, before 2010, ‘institutional landlords didn’t exist in the single-family-rental market; now there are 25 to 30 of them’.
The Covid pandemic appears to have accelerated the corporate land grab and many people selling their home in the US now do so to a pension fund or an insurance company.
The Wall Street Journal reported ‘yield-chasing investors are snapping up single-family homes, competing with ordinary Americans and driving up prices’.
Will it catch on here? Well, that’s down to the millennials.
For more information on selling your home please call Purdie & Co on 0131 346 7240 or visit www.purdiesolicitors.co.uk