In 2022, an average young person living in London needs to spend up to three-quarters of their salary on rent. After paying bills and travel costs, there is not much left for food or leisure.
According to Statista, in August 2022 employees in the United Kingdom were earning a median pay of £2,111 per month while the average rent of a one-bedroom flat in London was £1,500 a month. With the rising cost of living, it appears harder than ever for younger people to be able to save money, and being able to save up enough to buy their own house seems unrealistic.
“Today’s generation lives in a society where costs are rising without pay increases, affecting how much we can save and spend. It is certainly not easy to buy a house right now in this volatile economy. More and more young people are looking to move in and rent with their friends and partners than outright buy a house. This is the new normal, unfortunately”, says Lucy, a 26-year-old who shares a flat with three other people in London.
A new report by Mojo Mortgages suggests first-time buyers need to save an extra £15,000 to purchase their first home compared to January 2021. Based on data from its mortgage partners, Mojo Mortgages also found that the average deposit size has grown from 16% of the purchase price to 22%. Down payments have increased most in the South West of England, with the average doubling from £20,000 to £45,000.
Why can’t the younger generations afford to buy a house?
Some people believe that cutting out Netflix subscriptions, avocado toast, and Starbucks will help young people save for a home, which implies that they are overspending on unnecessary items. In fact, to afford a mortgage, you would need to save over 200 years on Netflix subscriptions.
A recent report published by ONS, Land Registry, found that the average house price is 58 times higher than it was in the 1970s, yet the price of other products has only increased by five to ten times. That being said, this might be the reason why older generations had more buying power than we have now.
@thatmortgageguy and many other TikTok content creators have been addressing this issue, which, unfortunately, “not enough people talk about.”
“I agree that the younger generation is having a difficult time buying a home, especially with the lack of economic stability.” comments Ruta, a 27-year-old graduate living in London.
The age of first-time buyers in the UK has significantly increased over the years. In 1997 the average first-time buyer was 26 years old, but in 2022 the age has increased to 34. This increase in the average age of first-time a buyer is likely due to the rise in the popularity of renting across all but the oldest age group. Those aged 25-34 have seen the biggest change, with 55% now renting, up from 35% in 1998.
“We see student debt, affordability gap, and credit building as crises that our generation is facing today. I remember the real estate our parents’ generation had, it was quite easy back in the days.” says Gaurav, a 29-year-old UX designer who lives in London.
The challenge of finding a flat to rent in London has become increasingly difficult for young people, despite renting seemingly being easier than buying. Although it seems insane, people have even begun to bid on monthly payments and offer up to a year’s rent in advance. In the absence of any alternatives, many prefer to rent a room in a houseshare, using websites such as SpareRoom to locate housing.
“Since I currently share a flat with few other people, I plan on moving to a new place soon. I was looking for apartments with 1-2 bedrooms mainly but noticed the prices have increased significantly, so I am not able to afford the kind of apartments I could afford a year ago. Also, my earnings didn’t increase as much as expenses, which makes renting a place on your own much harder.”, says Gaurav.
“The rising prices are making it very difficult to find new housing as there are fewer options. Compared to a few years ago, when I was looking for new housing, there was a better price and comfort balance. There was also more choice. At this point, there are more people looking for places than there are available on the market.” adds Ruta.
Despite attending more than 30 viewings in the last two months, some people still can’t find a flat in London, competing with those who offer 12-month payments and £300 more per month. TikTok user @Mikaella said that “securing a flat is all about bidding”.
On Tiktok, people are sharing their experiences of flat-hunting in London, suggesting others who are in similar situations move outside the city.
For young professionals seeking decent housing, is moving out of London their only option?
“I am definitely looking forward to moving outside of London. Even if I take into account the commute from home to work, it will be much cheaper for me to work that way,” said Gaurav.
“I would love to continue to stay in London but I’m also looking to relocate if the cost of renting is cheaper elsewhere,” admitted Lucy
“Living in London is very expensive and will continue to get even more expensive over the next few years, but I am trying to build a career here and gain more income opportunities” said Lorenzo, a 25-year-old graduate living in London.
Overall, as long as the cost of renting continues to go up and the offer fails to meet the demand, young people will have no other choice but to move to more affordable areas outside of London.
Featured image by Bethany Opler on Unsplash