Millennial Homeowners -Are they over-saturating the property market?
Statistics and general consensus points towards a large amount of Millenial homeowners reaching out with both hands to locate any piece of real estate they can find as first-time buyers, and can you blame them? Real estate data firm CoreLogic recent report suggests that this is causing housing prices to soar (even more than usual) and this upward trend could increase with a number of factors (such as Brexit) the main reason why so many are snapping up new properties and potentially increasing housing prices.
For as long as their have been properties, the market has fluctuated, with circumstantial changes such as the recession playing its part. Why is there such a high demand for houses in the UK? Maybe it’s because this small island is over populated, with the ‘baby boom’ of the 1960’s creating a population growth of roughly 53 million citizens. Fast forward to today and with the older generation living longer (life expectancy has increased by twenty years in the same period of time) and the influx of expats in the UK, no wonder there’s a housing crisis.
So how has this affected the younger generation of millenials’ looking to make a nest and settle with a family in their own home? Well, that’s a whole other story. Job security is at it’s worst in a long time (the introduction of zero hour contracts a prime example) and student loan debts average at 20k how are you supposed to save over ten thousand minimum for a deposit with those figures in a tough economy, which could get worse with Brexit looming? Those born between 1981 and 1996 may be close to saving enough for a deposit or splashed out on one already, which is fantastic for first-time buyers of this age group, but a large number at this age still need to live at home with parents.
It’s become the norm in the UK because it’s the only feasible option for quite a large amount of under 30’s – especially considering the changing of romantic relationships, with the age of those tying the knot higher and nearly half divorcing (42%), perhaps there’s not such a saturation of the market despite recent reports (based in the U.S) claiming otherwise. It’s open to interpretation but a lot of families simply don’t have enough to support their children with a deposit, so it’s usually only wealthy parents or sadly an inheritance that can allow a young person the cash needed to move out.
So where do you come in as a landlord? Basically, because of the reasons explained above, many are now turning to renting as the viable solution to getting some (much) needed time away from the parents and a bit of responsibility to boot. Renting is a much more affordable option than forking out thousands for a deposit, with millennial couples in particular opting for the former rather than the latter, which makes perfect sense due to job security and how many years it can take to save even as a joint effort. Properties are popping up all over the UK as real estate developers fight over every inch of land they can muster, turning one plot of land into five properties or a large space into a thriving new village.
The question remains as investor how can you capitalise on this opportunity? Well you might just be starting out on the property ladder or lucky enough to own multiple properties at just the right time. The demand for private-renting will only increase once Brexit is confirmed with or without a deal so advertising your properties will be key. Finding the right property to invest in may be a tougher decision, because so many are seeking to purchase their own home while they can, meaning the chances might be limited to increase your portfolio. If the figures are to be believed about millennials’ cornering the market, it may cause a sudden increase in prices, so it could force a greater financial effort to fend off competition from a variety of buyers, both investors and young potential home owners.
While you may claim ownership, the price may have inflated, despite it costing much less in previous markets/generations. So although you have the keys, now it’s about managing expectations to meet mortgage payments and still turn a profit. Saving every penny you can will create a greater business, so how you run your property, decorate, maintain and advertise will be vital. Just as competitive is the advertising market, with online taking over from the high street as the number one source to highlight your property to the public. Finding a cheap but effective platform to reach a large audience can help you avoid void periods and ensure you get the right tenant.