UK Homeowners Getting Older

Property in the UK is becoming even more difficult to afford, especially for those under the age of 30. With the average house in the UK now costing around £200,000, it is not surprising that a majority of under 30s are struggling to save up a deposit and get their foot firmly on the UK property ladder. (1)

The Cost of Owning Your Own Home

Everyone wants a place that they can call home. Somewhere you can come back to after a long day at work and feel safe, secure and spend time together with your loved ones. That is really what owning a home is all about isn’t it? But sadly, for many graduates and young adults in the UK, this life goal is moving further and further away from their grasp, as property prices rise.

The average salary for a graduate in the UK, according to savethestudent.org is £25,000, although they also state that they have reported graduates earning between £16,000 to £70,000, so the exact figure depends entirely on the subject you chose to study and the industry you work in. (2)

Working Example

Let’s discuss the possibility of a graduate who earns £25,000 owning their own home before the age of 30.

A three-year undergraduate course outside of London would leave the average graduate with a student debt of around £35,000- £40,000 according to which.co.uk. (3) You would be expected to begin to repay your student loan as soon as you earn £25,000 or over per year. The minimum amount you will be required to pay would be £30 per month.

After tax and your student loan repayments, a UK graduate earning £25,000 would take home on average £1650.60 per month. (4)

graduating

The average rental cost for a one-bedroom property in Manchester is approximately £600 per month. (5) According to the estimated living costs in Manchester, a month of public transport would cost £52, utility bills £150 (including council tax), mobile contract £30, Internet £20, gym membership £25, food bills of around £150 and the cost of maintaining a normal social life at approximately £200, would leave you with £422.60 to save towards a 15% deposit on a £162,532 house, the average cost of a property in Manchester, according to Rightmove. (6)(7)

If you were able to save the full £422.60 towards a deposit of £24,379, it would take approximately 4 years and 8 months to save up and purchase a first home. A graduate will normally finish university at around 21 years old, so you would be over 25 when you have saved enough for a 15% deposit. After four years, the UK property market will look considerably different, and experts predict that house prices will continue to rise. By the time you have saved up the 15% deposit, the £162,532 property might now cost £200,000. (8) A 15% deposit on this property would mean saving an additional £5,621, which could take over a year.

With the cost of getting married, potentially having children, owning your own car and paying for insurance and petrol, going on holidays, celebrating birthdays, as well as any other unseen costs that life can throw up, you can now begin to understand how some young adults find affording their first home very difficult.

getting married

Of course, there are many ways of cutting cost. Whether it be by sacrificing your social life, cutting down on food bills or using extra blankets rather than putting on the central heating. In addition, in some parts of the UK, you can find more affordable property, but you may need to set aside money for repairs, decoration and maintenance.

Pressure of Owning Your Own Home

Owning your own home can come with a serious amount of responsibility and financial strain, which some graduates are simply not prepared to put up with.

Taking out a mortgage is a big commitment and for those who feel unstable in their current job, or would struggle to meet the minimum mortgage repayments each month, this can be a lot of pressure and stress. The fear of having your own home being repossessed by your mortgage lender can be enough to put people off from purchasing a property.

A lot of graduates in the UK will travel around the country and sometimes abroad to pursue a career. The possibility that you may need to relocate and sell up quick, would not put yourself in a good position to purchase a property. It can take several months, and even years, to sell a house, which could affect your chances of securing a once in a lifetime position or dream job. Renting a property in these circumstances is far more practical.

According to a recent article in The Telegraph, the proportion of young people living in privately rented accommodation has ‘risen markedly’ over the past thirty years, with almost 64% of 21-25 year olds and 39% of 26-30 year olds renting in 2014, compared to just under 17% and 7.5% respectively in 1984. (9)

new property for sale

Renting to Save a Fortune

Many first-time buyers are choosing to rent affordable and all bills included properties in order to save as much money as possible towards a deposit. Renting a property enables young adults to save, work and live a less stressful life, during their first years as a working professional. If anything needs to be fixed, such as a boiler, it is the sole responsibility of the landlord to pay for the repair and fix the issue immediately, meaning no unforeseen substantial costs to worry about.

Property prices are rising and, despite the Government’s best efforts to help first time buyers financially, owning your own home for many under 30s in the UK is becoming an unachievable goal. Renting is far more popular among young professionals and the demand for affordable modern city centre property is set to continue to rise.

The Heaton Group specialise in the development of modern, affordable homes of multiple occupancy in Greater Manchester. To find out more about our latest developments please don’t hesitate to get in touch by emailing info@heatongroup.co.uk

Sources:

1. The Guardian - Average UK house price tops £200,000 for first time

2. Save the Student - What’s the expected salary for your degree?

3. Which - How much debt will you actually get into by going to university?

4. The Salary Calculator

5. Home.co.uk - Manchester Market Rent Summary

6. Numbeo - Cost of Living in Manchester

7. Rightmove - House Prices, Manchester

8. The Guardian - UK House prices pick up paces

9. Telegraph - Under 40? Five charts that show why you're a victim of the housing crisis


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