As new research shows millennials – those born between 1980 and 1996 – face still living in rented accommodation at age 30 and that a third of young people face living in private rented housing all their lives, I ask – so what?
Yes, it appears that Generation Y are not buying into the housing market – for a variety of reasons. Unlike their Generation X predecessors, who appear to love bricks and mortar as an investment. But I thought the whole point of buying a house was to have a home. And this is where the bubble has burst in the narrative of home ownership being a good thing for humans versus home ownership being a way to generate and accumulate wealth in a market.
I believe we humans started off living in caves. A cave was a safe place. A place where we found shelter from the elements and could rear a family and some goats. Even today in places like Spain, one can still buy cave houses built into rock. A cave provided protection and stability. This ties nicely into Maslow’s Hierarchy of Needs motivation theory that stems from the discipline of psychology. Maslow stated that people are motivated to achieve certain needs and some take precedence over others. The Maslow pyramid of needs is typically wide at the base and narrows as it rises. Along the bottom of the baseline run the human basic needs. And safety and security take up a whole tier of the pyramid. Accordingly, this is where a cave in Spain or a flat in Gorgie or a caravan in Somerset all complete the picture for what we humans need. Ostensibly, a roof over our heads where we can have privacy, security and a place to watch TV.
But, the market, like all markets, has spoiled this for the younger generation. My generation were instructed to get on the housing ladder as quickly as possible and climb it. This stimulated the mortgage market, which in turn stimulated a frenzy over the last 25 years in buying property simply to make money. In postcodes around the UK, many millionaires have been created simply as a result of buying a house and sitting in it while the market boomed. This market has created wealth for us and for the lenders who provide the capital to fuel the beast. But, now we have an issue. Now, we have a group of people in society who simply cannot afford to get on “our” ladder and who don’t really care for it. And why should they? When a one-bedroom flat in Gorgie is priced at £150,000, one cannot expect a 21-year-old earning £18,000 to be able to afford to buy it, never mind run it. Firstly, a whopping 20 per cent deposit is required. I see some banks are slipping back to smaller deposits. And we know where that led in the past. More fool them and maybe more fool us. So, £30,000 needs to go into my Gorgie tenemented flat as a deposit. Enter the bank of mum and dad. Ah, I see! Because we – Generation X – have done so well, pricing out Generation Y, we now have to fund them to buy in. Then there is the guarantor status that may be needed. Many lenders will want “mum and dad” to accept some responsibility for paying the loan down. It’s not really a case of cutting the cord and becoming independent for Johnny Millenial. It’s more a case of beg and borrow and owe.
So, many of them have switched their mindsets to renting and travelling and seeing home ownership as old-fashioned and a busted business model. They see us trapped into 30 years of paying off mortgage after mortgage only to be sitting in Morningside or Colinton with a big old lump of property that gives us security, but is worth nothing to us until we hit the cemetery. Perhaps for us owning a property and making some money was a noble cause. But young people nowadays, faced with extortionate prices, eye-watering utility bills and a fresh perspective on what is important in life, do not seem to share our vision for property success. Maybe Maslow and his hierarchy of needs is making a comeback as young people opt for a different form of cave.
- Jim Duffy MBE, Create Special