A SHARP rise in the number of fixed-rate mortgages in Spain has been reported in the past two years – and they now account for 43% of every new loan taken out.
Young adults are home rental market's biggest (and growing) customer base
29/09/2021
YOUNG adults are proving to be the main market for rented property, outnumbering other, older age groups, according to recent figures.
Despite high unemployment among the under-35s and, in particular, the under-30s, with low wages and job insecurity rife in this age group, property owners looking for tenants are more likely to find them among this community than in any other.
The rental market has dramatically grown since the start of the pandemic – in the first six months, it completely stagnated, but analysts reveal it is now more buoyant than even before the Covid crisis began.
Banks are tending to offer more flexible conditions for first-time buyers, mindful of the fact that unless young adults are able to get a foothold on the property ladder before around age 35, they may never do so as it would mean they were still paying off their mortgages long after retirement.
And although reasons for renting are many and varied, a key motive for becoming a tenant rather than buying a home is to 'get settled' and become used to independent living and making one's wages stretch before committing to the long haul.
Most want to buy, but cannot afford the deposit
This said, a significant minority of young adults aged 18 to 35 believe buying a home is the best option and one they aspire to.
According to a recent survey, 37% of this age group considers renting to be 'dead money', whilst 40% think home ownership is security for the future and 48% believes it to be a sound long-term investment.
But banks still, mostly, want a 20% deposit for home-buying – although there are exceptions, the overwhelming majority will only lend up to 80% of the lesser sum between the market price and the value, and fees on top for buying and for setting up a mortgage come in at around 12.5% on top of the sale price.
It is the near-impossibility of saving up for such a hefty deposit that is preventing first-time buyers from getting onto the property ladder – not, as was the case until around 2007 or 2008, the actual price of homes for sale.
At present, residential property averages around 37% below the peak market prices seen during the housing boom.
For those able to amass the deposit, mortgages continue to work out cheaper than renting – research carried out by InfoJobs reveals that the average tenant spends 41% of their monthly salary on rent, and would take six years to save up 20% of the value of a home plus legal and admin fees, enabling them to borrow enough to buy a property of their own.
Property market analysts say a joint effort between the estate agency network and the national government is needed to make home ownership and rental affordable and accessible for young adults, given that two in five of the under-35s still live with their parents.
Keen despite setbacks
Some regional governments are already taking steps – one of these is Murcia, which has a scheme in place to help first-time buyers with the 20% deposit.
And rental and purchase prices tend to be much lower outside of bigger cities, meaning if their jobs allow them to live in smaller towns or even villages in the countryside, young adults have a stronger chance of being able to access a place of their own.
Whilst the goal of independent living is fraught with setbacks for youngsters nowadays, the 18-35 community has been the most likely to buy or rent for some years now.
Figures for each year from 2018 to 2021 inclusive show that the average percentage of the population who carried out a property market transaction – buying, selling or renting – ranged from 23% in the first of these years to 31% in 2020, and 28% in the other two.
But for the youngest adults, 29% carried out a property market transaction in 2018, rising to 40% in 2019 and then 42% in 2020 and 2021.
Overall, the statistics show that young adults are very keen to gain their independence and are refusing to throw in the towel, however hard they find it.
In general, the most recent research hints that the eventual aim of the youngest adults is to buy a home of their own.
Reasons for renting
Annual surveys in the last three years show that the most likely reason for renting is that respondents are not in a financial situation to allow them to buy – well over two-thirds gave this answer, the same in 2021 as in 2020 and 2019.
Back then, 31% believed renting gave them more freedom than buying, although this has dropped to around one in five, but the 30% who said renting was a better option for being able to relocate for work in 2019 have now increased to around 33%.
In all three years, only around 16% or 17% said they had no desire to buy a property either now or in the future.
A slight increase, from 13% to 15%, has been seen in the past two years among those who said renting meant not having to pay maintenance and repair costs on their home.
For those who now sought to leave home for the first time and to rent a property, 12% in 2019 said this decision was because their employment situation had improved, rising to 16% in 2021.
A growing number – 7% in 2019, 8% in 2020 and now 9% - believe renting allows them to live in a type of property they would not be able to afford to buy.
And exactly the same percentages for each of these years applies for those who said they could not get a bank to give them a mortgage.
Back in 2019, 6% said it was the right moment to rent as 'prices were coming down', but nobody gave this response in 2020 or 2021.
Related Topics
YOUNG adults are proving to be the main market for rented property, outnumbering other, older age groups, according to recent figures.
Despite high unemployment among the under-35s and, in particular, the under-30s, with low wages and job insecurity rife in this age group, property owners looking for tenants are more likely to find them among this community than in any other.
The rental market has dramatically grown since the start of the pandemic – in the first six months, it completely stagnated, but analysts reveal it is now more buoyant than even before the Covid crisis began.
Banks are tending to offer more flexible conditions for first-time buyers, mindful of the fact that unless young adults are able to get a foothold on the property ladder before around age 35, they may never do so as it would mean they were still paying off their mortgages long after retirement.
And although reasons for renting are many and varied, a key motive for becoming a tenant rather than buying a home is to 'get settled' and become used to independent living and making one's wages stretch before committing to the long haul.
Most want to buy, but cannot afford the deposit
This said, a significant minority of young adults aged 18 to 35 believe buying a home is the best option and one they aspire to.
According to a recent survey, 37% of this age group considers renting to be 'dead money', whilst 40% think home ownership is security for the future and 48% believes it to be a sound long-term investment.
But banks still, mostly, want a 20% deposit for home-buying – although there are exceptions, the overwhelming majority will only lend up to 80% of the lesser sum between the market price and the value, and fees on top for buying and for setting up a mortgage come in at around 12.5% on top of the sale price.
It is the near-impossibility of saving up for such a hefty deposit that is preventing first-time buyers from getting onto the property ladder – not, as was the case until around 2007 or 2008, the actual price of homes for sale.
At present, residential property averages around 37% below the peak market prices seen during the housing boom.
For those able to amass the deposit, mortgages continue to work out cheaper than renting – research carried out by InfoJobs reveals that the average tenant spends 41% of their monthly salary on rent, and would take six years to save up 20% of the value of a home plus legal and admin fees, enabling them to borrow enough to buy a property of their own.
Property market analysts say a joint effort between the estate agency network and the national government is needed to make home ownership and rental affordable and accessible for young adults, given that two in five of the under-35s still live with their parents.
Keen despite setbacks
Some regional governments are already taking steps – one of these is Murcia, which has a scheme in place to help first-time buyers with the 20% deposit.
And rental and purchase prices tend to be much lower outside of bigger cities, meaning if their jobs allow them to live in smaller towns or even villages in the countryside, young adults have a stronger chance of being able to access a place of their own.
Whilst the goal of independent living is fraught with setbacks for youngsters nowadays, the 18-35 community has been the most likely to buy or rent for some years now.
Figures for each year from 2018 to 2021 inclusive show that the average percentage of the population who carried out a property market transaction – buying, selling or renting – ranged from 23% in the first of these years to 31% in 2020, and 28% in the other two.
But for the youngest adults, 29% carried out a property market transaction in 2018, rising to 40% in 2019 and then 42% in 2020 and 2021.
Overall, the statistics show that young adults are very keen to gain their independence and are refusing to throw in the towel, however hard they find it.
In general, the most recent research hints that the eventual aim of the youngest adults is to buy a home of their own.
Reasons for renting
Annual surveys in the last three years show that the most likely reason for renting is that respondents are not in a financial situation to allow them to buy – well over two-thirds gave this answer, the same in 2021 as in 2020 and 2019.
Back then, 31% believed renting gave them more freedom than buying, although this has dropped to around one in five, but the 30% who said renting was a better option for being able to relocate for work in 2019 have now increased to around 33%.
In all three years, only around 16% or 17% said they had no desire to buy a property either now or in the future.
A slight increase, from 13% to 15%, has been seen in the past two years among those who said renting meant not having to pay maintenance and repair costs on their home.
For those who now sought to leave home for the first time and to rent a property, 12% in 2019 said this decision was because their employment situation had improved, rising to 16% in 2021.
A growing number – 7% in 2019, 8% in 2020 and now 9% - believe renting allows them to live in a type of property they would not be able to afford to buy.
And exactly the same percentages for each of these years applies for those who said they could not get a bank to give them a mortgage.
Back in 2019, 6% said it was the right moment to rent as 'prices were coming down', but nobody gave this response in 2020 or 2021.
Related Topics
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