Saving for holidays more important to young people than a deposit
- 25% of 25-34-year-olds are more interested in saving for a holiday than for a deposit on a home (20%)
- 31% of these young people cannot save enough money for the deposit
- 64% have been unable to save as much since the start of 2023
Young people appear to be abandoning hope of becoming homeowners with more people aged between 25 and 34 saying they are putting away money for a holiday (25%) than saving for a deposit on a house (20%), new research from online savings marketplace Raisin UK has shown.
Despite property prices losing some ground in recent months, only one in six of this age group intends to buy a property in the next year. However, rather than being saddled with a mortgage at a time when interest rates have risen significantly in the last year and with inflation at near 40-year highs, one in seven admit they prefer to continue renting than buy.
With the Government’s Help to Buy Scheme ending this month Almost a third (31%) of young people say the biggest barrier they face is saving enough money in the first place for the deposit. But mortgage rates (26%) and fluctuating house prices (23%) are also key factors holding them back.
Far fewer young people – 10% compared to 25% of all those surveyed by Raisin – have the funds available to put down a deposit without needing to save.
And, with finances coming under increasing pressure as the cost of goods and services soars, almost two-thirds (64%) of 25-34-year-olds – compared with almost half (49%) of all demographics – are unable to save as much money to buy a home since the start of the year as they could in 2022.
Discussing the research Kevin Mountford, co-founder of Raisin UK, commented: “As the research shows purchasing, or even saving to buy a home, is far the priority list of ‘generation rent’ and it’s easy to see why. With the high cost of living and a fluctuating market, people are becoming disillusioned with the home-buying dream. But with the UK rental market also reaching breaking point – what other options are there?
“With the current mortgage affordability criteria not taking rental payments into account, which are often higher than proposed mortgage payments, something needs to be done at a regulatory level to include on-time rental payments. Renting a property is often more expensive than owning it – indeed, the government’s own figures suggest 50% of renters could afford the monthly cost of a mortgage and the inclusion of this as a factor could help thousands more get onto the property ladder.”
Buying a property takes time, with 32% of homeowners saying they took up to three years to save their deposit – rising to 74% among young people who took up to four years to do so – but 30% of us expect that our present abode will be our ‘forever home’.
Kevin continues: “Similarly, for those that are saving for a deposit, now is the time to bag a high-interest deal on longer-term accounts. Fixed-rate deals on terms longer than 12 months are at a peak, but won’t stick around forever, so if you are prepared to wait and invest for a longer-term buying option there are some great deals if you shop around.”