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LAURUS LIFE | Lifestyle
House prices have plateaued over the last year or so, making it an opportune time for young buyers to get a foot on the property ladder. And with initiatives like Help to Buy and shared ownership, homebuyers have more options than ever to give them a leg up.
But what do those first-time buyers look like today? In the past, this group fit a fairly conventional profile — young, married, and ready to start a family. But amidst shifting societal norms and the increasing gap between income and living costs, they look dramatically different from what they did fifty years ago.
Experts at leading North West housing developer Laurus Homes examined how the state of home-buying has changed since the Baby Boomers to understand how it’s shaped the first-time buyers of today.
According to data supplied by The Independent, the average age of a first-time homebuyer in the 1960s was 23 years old. Today, the average is 30. But why?
While arguments can be made in support of ‘extended adolescence’ and the millennial need to prioritise experiences over material purchases in their twenties, there’s one factor that stands out over all the others: price.
It’s no secret that house prices have increased. However, asking prices have escalated at a much faster rate than household income. According to Mortgage Solutions, the cost of the average UK home has rocketed up by 554% since the 1980s, far outpacing salary growth. That means today’s first-time buyers have less purchasing power than their parents — and it takes them longer to save to make up the deficit.
Even though the average age of a first-time buyer was 23 in the 60s, 84% of them were married.
Compare that to the 2010s, when the average age to buy is 30 and the marriage rate is just 30%.
But being single means you only have one income on which to secure a loan, making it more difficult to get approved. So why are so many first-time buyers going it alone?
There has been a shift between the Baby Boomers and Millennials when it comes to societal expectations around things like marriage. Skepticism around the institution of marriage stems from a decline in religiosity — with over half of Britons identifying as having no religion (The Guardian) — and the high divorce rate of their parents’ generation.
Moreover, weddings are yet another expense that millennials simply can’t afford. With the cost of living rising more than salary growth, many young Brits are putting their careers over starting a family.
Building equity in a house before announcing a wedding is a good way to fund it if it goes ahead, which could explain why today’s first-time buyers are going for a house before a spouse.
It may seem like the UK is losing its family values, but the data suggests otherwise. While 23% of buyers in the 1960s had financial support from family and friends, nearly half get a helping hand today.
In today’s tough housing market, parental support is more important than ever. Legal & General recently estimated that the ‘Bank of Mum and Dad’ would lend a staggering £6bn to their kids to help pay for deposits — making it the ninth-biggest lender in the country.
The Bank of Mum and Dad is becoming more necessary because of the increasing generational gap between millennials and Gen Xers, and even more so with Baby Boomers. With house prices rising so much faster than wages, today’s young adults don’t have the equivalent purchasing power equivalent to their parents, who’ve built up strong equity in homeownership while demand has skyrocketed.
The generational gap is so large, in fact, that the Resolution Foundation proposed giving millennials £10,000 each to make up for stagnant salary growth and increased living costs.
For that reason, today’s first-time buyers lean more heavily on familial support than any homebuyers in the past.
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