Why Generation Rent are worrying about their financial future
Parents are digging deep to help their children onto the property ladder
Alex Johnson has been part of The Independent's online team since 2007 and writes The Home Front property column. He has been writing about microarchitecture on his internationally-acclaimed website Shedworking since 2006 and is the author of three books, Shedworking: The Alternative Workplace Revolution, Bookshelf, and Improbable Libraries.
Wednesday 13 June 2012
Half of 20-45 year olds think that Britain will become a nation of renters within a generation while a third of parents are uneasy about their own finances because of the help their offspring now need.
According to research from Halifax and the NatCen Social Research shows, only 14% of non homeowners between 20 and 45 are actively saving for a deposit. At the same time, just 8% of parents feel that first time buyers should borrow money for a deposit - 44% have plans to contribute an average of £12,800 to help them out.
"Our research shows that young people are downbeat about their chances of owning a home, and we're also seeing the impact this has on their parents' financial future," said Stephen Noakes, Mortgage Director at Halifax. "Parents think that their kids could make cutbacks on holidays and going out in order to save for a deposit. However, parents continue to stump up a contribution or welcome their children back to the nest to allow them to save." Around 24% of parents said their children had moved back home as adults due to the current market situation.
Just over half of the 8,042 20-45 year olds questioned said they believed that Britain should remain a nation of homeowners and 78% still felt that it is a good financial investment. However, a quarter do not want to own a home and 40% would like to buy a home but do not believe they will ever be able to do it.
50% believe Britain will become a nation of renters within a generation , up from 46% a year ago.
The size of a deposit, high house prices and job security are the top three barriers to home ownership according to 'Generation Rent'. The research also revealed that in this age group:
* 26% have savings of less than £3,000 and 35% have no savings at all
* Those with savings have an average of £9,420
* Men have twice as much saved up as women, £12,550 compared to £6,380
While parents are digging deep to help out their offspring, 79% of them believe the younger generation should also go on fewer or cheaper holidays and a similar percentage feel they should cut down on going out to help save for a deposit.
Nearly a third of parents are dipping into their own savings to finance their chiildren's property and 6% contribute to monthly mortgage payments (or expect to do so in the future).
Both parents and their children are also pessimistic about mortgages. "Despite the launch of various initiatives to support first time buyers such as NewBuy," said Noakes, "both young people and their parents share a view that it is difficult, or even impossible, for first time buyers to get a mortgage, which this is clearly a point we need to continue to address. The reality is we continue to approve eight out of 10 first time buyer applications, more than double the amount that people expect us to."
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