Understanding key property trends in a changing world, including why millennials are buying homes in fewer numbers.
Millennials are not buying homes. This, of course, is not completely true. Millennials, those born between 1981 and 1996, are buying homes. They are just doing so in smaller numbers and at a later age than their parents did before them. And there are a number of reasons for this.
Defining a Millennial
There are estimated to be around 14 million millennials living in the UK alone. And according to a report by the think tank, the Resolution Foundation, one third of these will never own their own home. While most baby boomers owned their own home in their 30’s, for many millennials this is either still a long way off or just not going to happen at all. The potential social implications of this, as millennials age and begin to reach retirement age, are expected to be huge.
Millennials are individuals born between 1981 and 1996. Image sourced from channel Futures.
Why Millennials are not buying....
There are many reasons for why millennials are not currently, or will never be, the property and homeowners their parents were. Some of these reasons are due to economic factors outside of their control, but some are driven more by how millennials choose to live and how they choose to spend their money.
For many reasons, millennials are delaying getting married and starting a family. The age at which couples are getting married across Europe is increasing. At the same time, millennials faced with lower salary increases than their parents, and an increased job insecurity that the global collapse of 2008 and now Covid-19 have triggered, are also choosing to have children later in life. For many, the huge financial commitment to a mortgage makes no sense right now. Millennials are happier to live alone for longer, or even to stay with or return to their parents home for longer as well. For many millennials, without the push of starting a family to encourage them, committing to buying a property just doesn’t seem to make much sense.
Millennials, unlike the generations that came before them, are not only dealing with increased job insecurity but the crushing financial weight of student debt and university costs as well. Changes to fee structures and an increase in fees across English Universities means that on average, students in England, are graduating with their degrees plus over 40,000 pounds in debt as well. In the UK alone, each year, 17 billion pounds is lent out to get 1.3 million students through their university careers. Millennials, tied down by student debt, just don’t have the financial ability or the means to commit to buying a property. They are too busy paying back their student loans. Long a problem, in the US, it is a new burden on students in England and one that is impacting on their ability to get on the property ladder.
There is a growing affordability gap between what millennials earn, and how much property costs. This phenomenon is common across all large cities, be it London or Berlin. Millennials are increasingly attracted to urban centres- because this is where the innovation and diversity is. But this rapid urbanisation has pushed city property prices sky-high. In London, in July 2019, the average house price was 13.1 times more than the average annual salary. Even if millennials wanted to buy their own home, for many it is an unachievable dream financially.
What does this mean for how how Millennials live?
What this also means is that millennials are increasingly looking for rental properties they can call home. Their inability or unwillingness to buy a home of their own doesn’t exclude them from wanting somewhere great to live. There is a demand for quality urban spaces that understand the housing and living needs of millennials. Community is important, quality of the housing is important, location is important, facilities are important.
This in turn has driven the development and popularity of a new approach to housing that takes traditional co-living and turns it on its head. Millennials may not be owning property in the same way their parents did but this hasn’t stopped them from developing a way of living that suits what they need in the now and in the process pioneering a better way to live.
Vonder has been at the forefront of this changing trend in housing with its development of an approach to co-living that combines private flats with shared community facilities. This has lead to the development of our co-living London, co-living Berlin and co-living Warsaw complexes.