Millennials and Gen-Z are finding it more difficult to purchase a home post-pandemic.
It’s well-known that getting onto the property ladder is becoming more and more difficult for first-time buyers, with house prices skyrocketing and wages trailing behind living costs.
In recent years, the UK government has taken steps to provide support for Millennials and members of Gen-Z who plan to purchase property for the first time.
However, homeownership remains low among these younger generations, with only 41% of 25-34-year-olds owning property as of 2021. While this is a clear uptick from 36% in 2004, there is an obvious drop-off in the number of homeowners born from 1981 onwards.
So, where is the UK government going wrong when it comes to supporting first-time homeowners? Leading UK auctioneers Property Solvers delve into the topic.
Support Schemes
The low levels of homeownership among younger UK residents have not gone unnoticed or been ignored by the government. There have been numerous schemes launched in recent years in an attempt to tackle this issue, including:
- The Help to Buy scheme
- The Help to Buy ISA (this came to a close towards the end of 2019)
- First Homes
- Shared Ownership
- Help to Build
- The 95% mortgage guarantee scheme
The UK’s current property buying support schemes are described in greater detail within the government’s OwnYourHome portal.
However, despite these initiatives, positive movement in the numbers of younger UK citizens buying property has been slow.
The Challenges
There are a number of vital problems that the UK government needs to tackle if they wish to influence greater change in the levels of Millennial and Gen-Z homeownership.
With wages — particularly for younger generations — falling behind inflation and the cost of living, saving for a deposit is becoming increasingly difficult despite the 95% mortgage guarantee.
What’s more, lenders are becoming increasingly cautious in the wake of COVID-19 due to the virus’s impact on the country’s economy. This means it is now particularly difficult to gain approval from a bank or building society when purchasing a first home.
A further issue is that of employment and job mobility. The members of younger generations within the UK are more likely to move between multiple jobs over a short space of time.
In part, this is due to scarce promotion opportunities and a better chance of achieving pay rises or a more desirable position by moving from one organisation to another.
This makes it tougher for Millennials and ‘Zoomers’ to commit to staying in a single place. A property purchase commonly comes with a feeling of being anchored to one spot — something that is impractical for those who wish for greater flexibility in terms of employment opportunities.
What is the Solution?
While the UK government’s schemes are not entirely unhelpful for younger people planning to buy property, they tend to feel like a superficial fix for a more fundamental set of problems.
In an ideal world, the focus should be on resolving the country’s cost of living issues, incentivising less strict mortgage lending criteria and encouraging businesses to improve their employee retention rates and provide greater progression opportunities.
A proactive approach towards improving the financial and employment-related outlook of the UK’s younger residents may be the key to fixing our homeownership issues once and for all.
As the country continues to recover from the COVID-19 crisis, we must hope that progress in these areas can be made quickly and effectively.