If you had the choice, would you save for a deposit on a new home? Or would you use that money to go on a great holiday?
The truth is that more Brits than ever are deciding to vacation rather than to save.
At least, that’s according to new research by Moneysupermarket.com. They found that 43% of us are prefer to save for a holiday abroad than spend it on property.
It’s no surprise to many this is happening, of course. The price of properties always seems to be increasing. In some places such as London, the cost of a simple semi-detached is eyewatering.
Wages too have not kept up pace with surging house prices and saving for a deposit is taking longer and longer for everyone, particularly young people.
The Drop in Home Buyers
Over the last 20 years or more the number of first home buyers has dropped by 250,000. That’s a significant change but it wasn’t always like that. If you’re looking for a property today, you might be surprised to learn that back in 1981 one in three 16 to 24 year olds owned their home.
By 2016, this had changed dramatically to just 1 in 10. The average age of first time buyers has also increased. It now stands at 33.1 years.
- In 1991, 51% of us were home buyers. By 2016 this had reduced to just 24%.
- In 1996, 56% were renting a property. By 2016, this had risen to 73%.
Travel is More Fun
It seems that many younger Brits are falling out of love with the idea of owning their home. For the past thirty years it has been a key ambition for most of us, but that’s no longer the case. Rising deposits which seem so out of reach have certainly contributed to a change in attitudes.
Some of this has been driven by stilted wage growth over the last couple of decades, especially since the financial crisis. At the turn of the millennium, the cost of a house equated to about 23.3% of the average salary. Now that figure is 11.03%.
It means that first time buyers are struggling to find the funds for their deposits without external help. Things aren’t set to change anytime soon, either.
According to the research, in the next 20 years the price of property is going to continue to rise out of proportion to wages. That could mean that by 2038 you will be facing asking prices for an average flat of about £770,000.
The cost of travelling abroad has come down considerably over the last few years with budget airlines. More places are opening up to those who like to holiday, from simple trips to the seaside to adventure treks in exotic places.
Today’s young potential home buyers don’t want to be stuck at home saving for a deposit. They prefer to be living their lives and enjoying travelling. They want to be out there.
That’s why they’re more like to book a plane ticket than graft long and hard to raise the money they need to get on the housing ladder. And who can blame them?
You can read more of the research by Moneysupermarket.com here.