Iona was on BBC Breakfast this morning talking about a new Local Government Association report which says only 25 per cent of under-25s now own their own home compared with 50per cent a couple of decades ago.
The BBC asked young people in Manchester about home ownership:
“The kind of money someone my age earns is never going to be anywhere near enough to be looking at mortgages, the best thing to do is to rent”
“It will take a while to save for a deposit but it’s a sign of independence and maturity owning your own house”
“I’m 24 and saving for a deposit, I live with my mum and dad, renting is throw away money but I got a promotion recently which should help”
Presenter Sean Farrington, who said Iona runs the Young Money Blog and writes about finance for young people, asked how difficult it is for young people to get on the housing ladder.
Iona: “It’s hugely difficult. The fundamental reason is we have a shortage of housing, we should be building 250,000 new homes a year and we have been falling woefully short for many many years. It stands to reason that if you restrict the supply the price is going to go up. There is still a huge appetite for home ownership among my generation, although a lot of people have embraced the renting lifestyle, so many see it as a way of having your own asset.”
Sean: “We read all the time about the interest rates on mortgages being at their lowest ever level, yet it seems young people still can’t get onto the housing ladder.”
Iona: “It is all very well having cheap mortgage rates but if you have rising house prices like we have in this country there is still a huge difficulty in getting on the housing ladder and at the same time people are spending more and more of your income on renting. This report says that without state subsidies the average amount renters are spending on housing is 61 per cent (of income), that is huge.”
Sean: “Is it really possible for young people to afford a mortgage when they are already burdened with debt such as student debt and so on?”
Iona: “It’s interesting that we have become so accustomed to debt. Out generation, if they come out of university say, they have been used to living on an overdraft, then they have student debt, and it’s quite strange to then get into the mindset of saving 10% of their income every month, and they will need so much more than that to get on the housing ladder so they need help from the bank of mum and dad.”
Sean: “Is it also the case that with TV subscriptions and mobile phone bills and so on people in their twenties are spending a lot more than used to be the case?”!
Iona: “I think it’s a fair point. The older generation would say look, houses weren’t handed out free when we were young, you still had to save a huge amount and you also had to buy a property that was a bit down at heel and needed life breathing into it. Our generation perhaps wants a house that is set up, we see pictures in Instagram, Twitter and social media of this perfect lifestyle and perhaps they want to be able to set foot in a house without necessarily putting the work in and rolling up their sleeves to do it up.”
Do you have views on the subject – how has the housing crisis affected you? Are you still aiming to get on the housing ladder or have you resigned yourself to a life of renting?
We’d love to hear from you to get a good cross section of young views – so get in touch!