Generation Boomerang: meet the graduates supported by the bank, the fridge and the home of mum and dad
- Credit: Getty Images/iStockphoto
More and more young people are choosing to live at home in north London in the face of soaring property prices and an unaffordable housing crisis that has removed the lower rungs of the property ladder, leaving them without a foothold
Young people are choosing to live at home for longer in the face of figures from the Office for National Statistics released last week that revealed a 5.8 per cent rise in national house prices in the year up to February 2017 to an average property price of £217,502. First time buyers will now expect to pay £183,857 across the UK. The rate of growth has slowed since last year, although property prices continue to effectively price young people out of the London market, where the average price of a first time buy property is £475,000.
In Islington, prices fell 1.9 per cent to an average of £616,152, with Brent recording a 2.3 per cent fall. Camden prices remained stagnant, rising just 0.6 per cent, with the average cost of a property a wholly unaffordable £832,191. The average price of a home in Hackney has risen 3.4 per cent to £575,511, while properties in Haringey now fetch £562,564, rising 9.8 per cent from February 2016.
With such a crisis of affordability, it’s no wonder that 25 per cent of 18 to 34 year olds are relying on inheritance to get a foot on the ladder according to Halifax, with the National Union of Students revealing that 47 per cent of graduates who left university in 2015 had returned home within six months.
Martin Ellis, Halifax housing economist, said: “Even with the highest number of first-time buyers in the last decade in 2016, many young people still feel they are running financial gauntlet – saving for a deposit, finding an affordable property in the right area and managing to fund living in the meantime.”
According to a study by retailer Direct Blinds, 36 per cent of so-called ‘boomerang kids’ said they could not afford high rents, with one in five paying just £250 a month in rent to their parents, and 15 per cent paying no rent at all. The study estimated that £2000 could be saved by graduates hailing from the capital with parents welcoming the return of their little birds to the nest. The problem is compounded for those who move to the capital in search of better career prospects and have to fund their own accommodation, food, bills and living costs.
Zany Renney, 22, lives with her parents at the home where she grew up in Cholmeley Park, Highgate having graduated with a degree in Politics and International Relations from Bristol University in June. “The reason I am living at home is firstly that Highgate is really well located and anywhere I could afford to rent would be a worse location,” said Ms Renney. “Secondly, it would take me longer to get into the city to work and also I don’t really want to spend the money on renting. I’d rather save up my salary and then move out later but actually be able to buy somewhere when I do move out.”
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Some graduates might find the prospect of moving back in with their parents after three or four years of independent student living rather daunting, but 39 per cent of those surveyed by Direct Blinds said they preferred to have more disposable income, with one in ten saying they lived at home because their parents cooked and cleaned for them. 29 per cent of parents admitting to funding their child’s food bills, and 35 per cent to funding Netflix accounts and holidays. “I can understand some people who move back home are restricted to certain hours of the day that they’ve got to come in and out by and what kind of thing they can do,” said Ms Renney who is relaxed about living at home. “My parents are very chilled and inviting.”
Ms Renney hopes that she would be able to move out in two years, although she wouldn’t want to live alone. “I’d hope to move in with two friends but I don’t know which of my friends have got the same forward planning as me,” she said.
Saving for a deposit is one of the benefits of living at home. Lloyds Bank revealed in March that London’s first time buyers will require £87,853 for a deposit, double the national average. Deposits in Camden stretch to £150,331, just behind the highest prices paid in Hammersmith and Fulham. First-time buyer mortgages have increased 71 per cent since 2012 to £317,253.
Andrew Mason, Lloyds Bank Mortgage Director commented: “Over the past five years, the price of a first-time buyer purchase in London has risen by an average 67 per cent, with some parts of the capital recording even more substantial rises.” Lloyds reported a 5 per cent drop in first time purchases last year.
Young people who have grown up in affluent Camden are understandably reluctant to relocate and pay more to do so. “I’ve grown up here,” said Renney, “so I feel like I’d move somewhere that was a worse location and didn’t have the same kind of amenities that Highgate does, and I’d just find it a bit frustrating. But that’s because I’ve been so fortunate to be able to live in such a great location.”
In January, the government announced Starter Homes, offering new homes built on Brownfield sites at a discount of 20 per cent off market value for first time buyers aged between 23 and 40. Housing Minister Gavin Barwell said: “This government is committed to building Starter Homes to help young first time buyers get on the housing ladder.” That commitment seems somewhat rich considering cuts to housing benefit for single people aged between 18 to 21, which came into effect this month.
Regeneration schemes continually promise new homes at ‘affordable’ prices. Of the 3,050 new homes pledged in Camden’s Community Investment Programme, 46% are pitched as ‘affordable’ with 1,650 on the market for private sale. But what does the term mean? Camden Courtyards by Barratt Homes provides 164 ‘affordable’ homes priced starting at £755,000 up to just shy of £1,000,000. To those on average salaries, such prices are wholly unaffordable. As old flats get knocked down and shiny new towers go up, young people are priced out and left looking up at the insipid penthouses dangled in front of their noses and promised to them as ‘affordable’.
Perhaps the baby boomer dream of home ownership has simply died. Halifax found that 22 per cent of survey respondents committed home ownership to the past, 10 per cent believed they would rent forever, and one in ten of those aged 18 to 34 said they would be prepared to leave the UK to buy a home elsewhere. Understandable, perhaps, since ONS figures show that homes in Camden cost 19.6 times average annual earnings.
Maybe renting is a better choice for our lifestyles. Benham & Reeves Lettings reported that 33.77 per cent of respondents were prepared to commit just 20-30 per cent of monthly income towards housing. Could it be that millennials are less materialistic than our parents and grandparents after all? “Whereas Baby Boomers or Generation X craved the stability and financial security of home ownership, today’s young professionals see things differently,” said Benham & Reeves Lettings Director Marc von Grundherr, explaining that living and working abroad was more appealing, whilst spending power ranked above saving for a deposit.
London is a popular choice for graduates. It attracts them because of the excellent career prospects and lively social scene. With such a crisis of affordability, it’s no wonder that so many graduates are returning home or choosing to rent long-term. For those who aren’t lucky enough to have a hefty inheritance, a flat funded by the bank of mum and dad or savings from years spent as a boomerang child, the options are few and far between if and when the time finally arrives for settling down and buying up. Maybe London simply doesn’t want to provide homes to ambitious young people any more. In that case, there’s always Blaenau Gwent, where prices are the lowest in the country with an average of £78,000.
Average mortgage taken out by a first-time buyer in London: £317,253
Average monthly mortgage payments in London: £1,386
Full time average earnings in London: £44,549
Average age of a first time buyer: 32
(Lloyds, March 2017)
Most expensive borough for first time buyers: Camden
Least expensive borough for first time buyers: Barking and Dagenham
Highest price rise for a first time buy property since 2012: Waltham Forest (93 per cent)
House price rise for first time buy properties in Camden since 2012: 47 per cent
House price rise for first time buy properties in Islington since 2012: 49 per cent
(Lloyds, March 2017)