How Can First Time Buyers get on to the Property Ladder?
First time home buyers are constantly being told to adjust their spending habits if they want to be able to buy a house in today’s market. But how much is enough? What are millennials expected to give up if they’re looking to get on the property ladder?
With most first time buyers are at least 30 before getting onto the property ladder paying an average deposit of just over £20,500, compared to the 1960s where the age was 23 with a deposit of almost £600 (equivalent of almost £1,300 today), what kind of realistic cutbacks can one make to own their first home?
Millennials often face criticism for their ‘unnecessary’ luxury spending habits i.e. rooftop cocktails, avocado on toast brunches and expensive dinners out. However, if they were to give all this up, how much of a difference would it actually make?
Whilst an accumulation of small lifestyle changes can help young people save for a home, giving up a few luxuries for a year probably isn’t going to make that much of a difference. Rather, first-time buyers might want to look at other money-saving options.
Many youngsters have decided to move back home with their parents in order to save on rent and bills. While they may have to sacrifice on their privacy and independence, it’s a short-term sacrifice for a long-term goal. Others have taken a different route by re-organising their money. First-time buyers may want to consider opening up a Help to Buy ISA or Lifetime ISA as both offer government bonuses for savings.
On the theme of money readjustment, many millennials are relying on technology to organise their finances; some have left it to money organising apps to help them with their spending. Apps like Monzo and Plum have taken off in recent years and can help track spending, set budgets and meet saving goals.
First-time buyers will face a lot of housing market uncertainty in the coming years but one thing’s for sure, removing a few luxury items from their day-to-day habits won’t cut it. Millennials need to think about long-term lifestyle changes if they are to get on the property ladder any time soon.