Young professionals of today are having to search harder than any previous generation to find value for money when buying their first home in London. Securing that healthy balance between an area that you would actually like to live in and a flat that you can afford has never been so challenging.
The so-called “Bank of Mum & Dad” is still the biggest lender among this demographic, known as the Millennials or Generation Y, who were born between 1980 and 2000. However, that source of funding can only stretch so far: it’s not a limitless pot. As prices increase, for all except the very fortunate, it doesn’t necessarily follow that parents are prepared to keep digging deeper in order to bridge the gap.
As a result of the increased demand for value across wider London, areas such as Brixton and Tooting are now up and coming; not so long ago they were almost no-go zones. Places which were traditionally less gentrified and safe are now hip and trendy hot spots for millennials to hang out. It’s easy to understand how quickly these places can change with the influx of so many younger people spending time (and money) locally. They need to evolve and offer the variety of shops, cafes, bars, restaurants which meet the demands of this new clientele. A new restaurant offering opens up every week in Tooting, I hear on the grapevine.
With fantastic mortgage products on the market and record low rates, it still makes sense to buy if you can. Not only is it cheaper in the end than renting but it saves you paying someone else’s mortgage, rather pay your own. Issues, however, remain with the deposits which tend to be demanding: between 20% and 40% of the overall value of the property is typically required by the banks and lenders to secure the best mortgage deals. When you bear in mind that a standard two-bedroom flat in Clapham, Fulham, Brixton or Putney currently costs £650,000 plus (or more), it’s a hefty chunk of cash to have lying around.
Travelling to work understandably plays a huge part in the decision making process and, as this search for value continues, it begs the question, how far out are buyers prepared to go? The boom of the new build housing over the past 6 or 7 years in East London has catered particularly well for those that aren’t prepared to keep pushing further and further South or West. Whole communities and districts are being built in Stratford, Greenwich and London Docks which are catering for millennials’ every need. They have new transport links allowing them to get to work in the City as little as 5 or 10 minutes. Not only that but developments often come with gyms and porters, spas and swimming pools. There are restaurants and bars for afterhours socialising and, if owners need to hot desk or conduct a quick meeting or networking event, there are designated offices and meeting rooms too. Although the price gap between East and West is quickly closing as more and more buyers move in, there is still reasonable value in comparison and therefore the quality of property that you can afford is higher.
Millennials are recognised as an aspirational young bunch who have been brought up with the mentality that one should always own your own home–be ‘king of your own castle’. This is not the case in other countries such as Germany or France where Millennials are very comfortable renting and are quite happy not to have the responsibility or admin that comes with owning your own property. In the Mayor of London’s last policy statement it was acknowledged that, due to shortages in supply and rising prices, this generation may be the last generation to stand a chance of being able to afford their own home. Therefore, the Government is working hard, through the promotion of the Private Rented Sector, to change the sentiment among young people, away from the desires of owning your own home instead to aspire to rent the best flat in the best building in the best location with the best services, in some ways, not unlike hotel living. I believe they are being dubbed ‘Generation Rent” but, in the end, only time will tell.
Top 5 “must haves” for millennial buyers
- Access to parks or open spaces. Sunbathing in the summer or making use of the activities of an evening. Many millennial buyers currently looking in London have grown up in the countryside outside of the city and greenery and open space is something they crave. It reminds them of home!
- Gyms! This is an increasingly important requirement. Millennials love to keep in shape and being able to work out is very important. New gym studios are catering to this growing demand and you will no doubt be able to find a plethora of yoga, HIIT, or good old boot camps in most of these areas now. Lululemon seems to be the current sportswear brand of choice for many.
- Transport. Millennials take pleasure in working and are all striving to stand out from the crowd, however their social time is equally important and therefore being able to travel home quickly is a must.
- High Street. Millennials like to spend their money and what better way than on smashed avocado on sourdough toast at the weekend.
- New bathrooms and kitchens. With so much of their budget being spent securing the property, these buyers won’t want to take on something that requires further investment.