It is an open secret that Bath’s younger generations are struggling to get themselves onto the property ladder. With the ever-increasing cost of living and stagnating wages, alongside stricter mortgage criteria, it is no wonder that fewer under 34s’ are becoming homeowners.
How bad is the situation? Is there any hope up on the horizon for young people to find a place to call home?
BATHS HOUSING CRISIS: THE STRUGGLES OF THE UNDER 34s.
According to statistics from the Bath and North East Somerset Council (BANES), there are 79,250 households in total. Of these, 1.8% are headed by individuals aged between 16-24, whilst 10.6% are between 25-34.
Compared with the 2.6% of all UK households that are made up of people aged between 16-24 and the 13.5% made up of people aged between 25-34.
Looking specifically at the 16-24 age bracket within Bath, the households can be broken down as follows:
- Owned outright: 3.3%
- Owned with a Mortgage: 14.6
- Social Housing: 22.5%
- Private Rented: 59.5%
Nationally, this compares owned outright 3.6%, 10.2% owned with a mortgage, 22.8% social housing, and private renting 63.5%.
Next, moving onto the 25-34 year old age bracket breakdown:
- Owned outright: 3.8%
- Owned with a Mortgage: 43.8%
- Social Housing: 11.2%
- Private Rented: 41.2%
Nationally, this compares owned outright at 4.1%, owned with a mortgage at 35.5%, social housing at 17.7% and private renting at 42.7%.
For a city like Bath, these numbers paint a bleak picture of property ownership in the younger generation. But why is this happening?
Well, the answer is multifaceted. It is not just an issue around the rising price of housing. Wages have not risen in line with inflation and with lenders becoming more conservative, the amount of deposit required to secure a mortgage is higher than ever before. For young people who are already grappling with student debt and rising rental costs, saving for a deposit is becoming an insurmountable task.
THE SHIFTING SANDS OF HOMEOWNERSHIP:
Yet, while the prospect of homeownership for the under-34s in Bath is slipping further out of reach, it is worth putting these figures into a wider context. Homeownership is not something that young people have done en masse, at least not in recent decades of the 2000’ and 2010’s.
While the Baby Boomer generation often bought homes in their early to mid-twenties back in the 70s and 80’s, the dynamics of homeownership have changed dramatically since then.
The average first-time buyer in 1980 was 26, now the average age has gone up to 31, and 34 in London.
In the 1980s, when the housing market was more accessible, people were more likely to buy a home at a younger age. However, as times have changed, so have social and economic conditions. The cost of housing has skyrocketed, whilst wages have not kept up at the same pace. Furthermore, younger people today are often burdened with additional expenses that weren’t as prevalent a few decades ago such as student debt loans and a cost-of-living crisis. This combination is making it much harder for younger people to save for a deposit and thus secure a mortgage offer.
Now, whilst this may sound doom and gloom for Bath’s younger generation, there is a silver lining if we look beyond the short term and consider the longer term market conditions. I countries like Germany, homeownership doesn’t typically happen until later in life. Germans tend to rent for longer (often well into their 30s or 40s) and then purchase a home later in life. When they do finally buy, they have more financial stability, and higher incomes and often make larger down payments. The result of this? Less debt and more security later in life.
This delayed homeownership is becoming more common in the UK, and Bath is no exception. What we may be seeing is not a permanent decline in young homeowners, but a shift in the timing that people buy. Instead of purchasing homes in their 20s, more people are waiting till their mid-30s or even early 40s to buy, when they have some more financial stability.
THE HIDDEN £28bn BATH AND NORTH EAST SOMERSET EQUITY:
One key factor we cannot ignore is the £28bn worth of equity tied up in the homes of the 50+ years old generations in the BANES area.
Many older residents, who bought homes decades ago when property prices were affordable, are now sitting on this substantial equity. As these homeowners begin to downsize or pass down their properties to their children and relatives, we may yet see a significant transfer of wealth to the younger generations. This could provide a lifeline for many would-be homeowners who are currently priced out of the market.
In Bath, where family connections are strong, and homeownership is passed down through generations, this transfer of wealth is likely to have a profound impact on the housing market in the coming years. Many younger people will likely find themselves with the capital to afford a downpayment on a home or be able to inherit the estate their parents currently reside in.
WHAT DOES THIS ALL MEAN FOR THE FUTURE OF BATH HOMEOWNERSHIP:
The future is not all doom and gloom. Yes, the current statistics suggest that homeownership is out of reach for the majority of under 34s, but this is not a permanent trend. There are several reasons to be optimistic about the future. Firstly, as more young people prioritise their savings and look for ways to access the property ladder, we could see a shift in homeownership rates among the under 34s. Previous schemes such as Help to Buy and shared ownership can also provide much-needed assistance for young people to get onto the property ladder.
Secondly, the aforementioned generational wealth transfer will hopefully provide younger people more opportunities to purchase homes, either through direct inheritance or financial gifts. Regardless, the generational shift will most likely play a significant role in shifting the current market trends.
There is absolutely no denying that the current market conditions are making it incredibly tough for young people to get onto the property ladder, but for those willing to plan and save strategically with the right help and support, many young people across the UK and Bath will find that they can, in fact, become homeowners.
It is clear the property market in Bath is changing and will continue to do so. Young people may not be buying homes at the rate they used to, but by staying informed, seeking the right opportunities and staying patient, you will be able to afford your first home.
The situation is far from hopeless, Baths future homeowners are out there, they’re just waiting a little longer to step onto the ladder.
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