Buying your first home is a dwindling dream for many young Londoners; a dream not helped by commentators who blame millenial’s spending habits for their inability to put together a deposit o five per cent or more of the property’s value.
A Netflix subscription or an ‘overconsumption’ of avocado on toast, or even the odd Pret is not the problem though, says Simon Gerrard, managing director of Martyn Gerrard estate agents and past-president of the National Association of Estate Agents.
“It’s quite shocking really. Figures published in late 2021 show that where homeownership amongst 25 to 34-year-olds stood at 51 per cent in 1989, by 2019 the number had fallen to 28 per cent.”
Given current property prices, this is not wholly surprising claims Gerrard.
This week’s ONS figures revealed that the average UK house price now stands at £295,000, whilst being even more expensive in London at £542,000.
Gerrard adds that the cost of property is, in no small part, linked to the sheer shortage of homes, which will likely prevent any steep fall in property prices. “Thanks to successive governments’ failure to build homes, young people face a challenge not only in finding somewhere to live, but paying for it, too.”
How to get on the property ladder in London
“For many young Londoners looking to get a foot on the ladder it is by no means impossible,” Says Gerrard
“In fact, getting a foot on the ladder is a really useful way of thinking: it is advisable to get on sooner rather than later, even if that means stepping on at a slightly lower rung.
Think with your head and your heart
House price growth may have slowed, but the market is unlikely to see the kind of drop that would make the ‘Instragrammable’ property a reality tomorrow. And given prices have tracked upwards for decades, purchasing a property you’re prepared to live in for five or six years – even if it is not your first choice – will provide not just a home, but a solid longer-term investment, too. Take advantage of the market turbulence whilst the ripples of the mini-Budget are still being felt.”
Think outside your ‘chosen’ area
Gerrard urges home buyers to be realistic and astute, and this goes for the areas in which they are looking, too.
“It may be inconceivable to Londoners today, but not all that long ago Crouch End was considered the less affluent cousin of Muswell Hill. Those who were prepared to get on the ladder in this particular North London suburb will have found the decision has paid dividends in increased property prices. Today’s buyers would do well to search for the areas with potential and, again, there are a few tricks available.”
He points out that schools and extensive transport links usually denote that an area has already ‘up and come’. So finding an area with slightly fewer amenities (and schools) could not only mean a lower initial purchase price but an investment that could pay off in the long term.
Cut your costs
Gerrad calls this defraying costs. “Certain costs are unavoidable: there isn’t much that can be done to bring down legal expenses – such advice being vital and often obligatory – but careful planning can save money in other areas to help deposits go that bit further.”
For instance, is it necessary to hire a removal company or could you call in a favour from friends? Opting for a well-insulated modern property over a period alternative, for instance, could significantly reduce heating bills.
“Combined with various money-saving measures when accumulating a deposit – walking to work to save hundreds of pounds a month on tube fares, for instance – these little tricks can be something of a godsend. Meanwhile, a mortgage adviser – especially one independent of the building societies – can provide useful advice, too.”
There is support available
Various government support schemes exist to help with buying a property. In London, for instance, it is worth looking into the initiatives developed by the Mayor, including ‘shared ownership’, which allows individuals to buy at least a 25 per cent share of a property in a home and pay a regulated rent to the freeholder on the remaining share.
“Homeownership remains a commendable aspiration for many. And though it is tricky, there are a few tricks available that will go some way to helping make the dream a reality,” adds Gerrad.