Around 20% of parents in the UK who have recently moved to a new home have disclosed that they did so in order to acquire a larger home due to underlying fears that their children will be unable to find their own housing until their late 20’s, a recent survey has revealed.
The Royal Mail conducted a survey in order to analyse the reasons why homeowners have opted to move in the past 12 months, and compellingly found that a number of parents are now beginning to move to a larger home from a relatively early point in their children’s lives in order to prepare in advance for the reality that they will be unable to afford to leave home in their 20’s due to stagnant worker wages, rising interest rates and a boom in property prices across the country.
Property prices in the UK have soared in the past 18 months after a period of relative stagnation in the housing market, and have caused a number of young people to be rendered incapable of leaving home due and unable to afford the costs of purchasing or renting accommodation independently.
The Royal Mail’s survey comes weeks after separate figures revealed that over 3 million individuals in their 20’s and early 30’s are currently still residing with their parents, representing a staggering rise of 25% since 1996.
This figure is expected to rise substantially by 2020, as property prices continue on their upward trajectory, with it also being forecasted that these higher costs will transmit onto the price of renting accommodation as well as landlords are forced to pay higher monthly sums on their own mortgages and pass these costs onto their tenants.
Supply low, demand high, wages stagnant
The survey polled 13,000 homeowners and found that 21% of parents who have moved house recently primarily did so in order to prepare in advance for their children residing with them into their late 20’s.
The findings are consistent with independent data released by the Office for National Statistics earlier this year that compellingly revealed that the quantity of young people living at home with their parents rose by 175,000 during 2013.
Andrea Martin, Royal Mail’s managing director of data services, said: “It is interesting to see so many people buying larger properties in the expectation that their children will be living with them longer into adulthood.
The huge deficit between supply and demand has been forwarded as the primary reason why prices have soared at such a fast rate recently, with London and the South East being identified as the most problematic areas in the country due to demand being so high, properties typically being more expensive anyway and the cost of living making it unrealistic for a number of young workers to pay for housing costs on their current salary.
Recent figures from the Land Registry about property prices in March illustrated that they had risen by 5.6% on a year-on-year comparison, with many other lenders alarmingly reporting far larger yearly price rises.
It is now estimated that the average price for a first-time buyer stands at £192,000, substantially higher than the £125,000 estimate given for the equivocal statistic 10 years ago.
Charity Shelter has argued that it will now take the average couple around 6 years in order to save enough money to pay for the deposit on a home, whilst for individuals this extends to 11 years.
‘Avoid repeating mistakes’
The news comes on the same day as the OECD called for the government to place a number of restrictions on their flagship Help to Buy scheme, in order to stop the property market overheating and stabilise housing prices in the country.
They argued that whilst property prices are rising at an exceptionally quick rate, that wage growth remains relatively thin and as such measures should be undertaken in order to stop alienating a large range of people from purchasing property independently in the next few years.
Despite persistent identifications by a number of market analysts that the country’s housing market is heading for a bubble, the Bank of England has consistently highlighted that they have the tools at their disposal to prevent this happening if it ever grew too close to manifesting in reality.
However, last week its deputy governor, Sir Jon Cunliffe, suggested that rising property prices now pose the single greatest threat to the UK’s economic recovery, arguing that it would be “dangerous to ignore the momentum that has built up in the housing market”, and called for policymakers to be constantly vigilant about the activity within it in order to lower the risk of a bubble occurring in the future.
The UK Treasury has since committed to monitoring the market closely, with a spokesperson identifying: “The chancellor has said we must remain vigilant in order to avoid repeating the mistakes of the past.
“This government has given the Bank of England new powers and new responsibilities to monitor risks in the economy and take action if necessary, something that did not happen before the crash.”Source; MoneyExpert