With a third of the rental market being Gen Zers, and 60% still living at home, many find home ownership more unattainable – even with tens of thousands in the bank
There are so many things to think about when you’re a first-time buyer: the legal fees, the mortgage deposit, passing the affordability checks, conveyancing costs, potential stamp duty and where to locate.
Add that to the increasing interest rates, the cost of living and housing crisis, and home ownership is becoming a distant dream for many Gen Zers. Over 70 per cent of their parents’ generation (Gen Xers) own their homes but the number of young people being able to afford to move out is diminishing, with 60 per cent still living with their parents.
The deposit, some have found, is the easy part, more so with the introduction of 95 per cent mortgage schemes in 2021. But then the monthly payments and risk of rising interest rates mean more young people are left with savings – but no house to show for it.
Emily Cottrell, 34, has always dreamt of owning a home. “Since childhood, home ownership has been a dream of mine. It’s a sign of security and autonomy,” she tells The i Paper.
She’s done everything she can to attain the goal. As a behavioural psychologist she earns £35,000 a year and she tops her income up as a psychology writer earning, on average, an extra £7,000. She spends the minimum amount she can by living “frugally”, skipping outings and holidays to keep adding to her cash pot.
Since 2020, she’s saved £25,000 – but home ownership seems further way than ever before.
She feels hopeless when she reads about how interest rates have rocketed and property prices have increased over the last decade. “It’s begun to feel illusory. The mortgage would just run me into a pit at the end of each month. It is a bad idea at the moment.”
Last year, the average deposit for a first-time buyer in the UK was £53,414. Data from letting agent Hamptons showed that Gen Z buyers will pay £104,400 on average in the first five years of their mortgage, while millennials see average repayments of half that amount (£51,800).
As of November 2024, the average UK pre-tax salary is £35,464 but the average house price is £267,500. Richard Dana, founder of Tembo, a digital mortgage platform, has done his own research and found that the number of first-time buyers having to wait until they are aged 50 or older to purchase a home has increased by 30 per cent in the last five years.
Cottrell says: “I wanted to purchase a home within two years, somewhere between 2025 and 2026. I thought I’d have an easy deposit and be in a position to afford a decent mortgage by then but now, in the face of economic volatility, interest rates and increasing home values, this vision is more difficult to imagine. It seems less and less likely now.”
As a result, more young people have been forced to rent. Gen Z made up a third (36 per cent) of renters in 2023, which was up from 1 per cent a decade prior. Cottrell has been one of them since she was 23, now renting a flat in Bradford for £850 a month. “It’s harder to save as the price of the lease goes up. The fact that so much of my money is spent on rent instead of equity on a house is annoying.”
She grew up in the home her parents own and although she’d love to remain hopeful that she can achieve the same, it’s a harsh reminder that the world has changed for first-time buyers. “My parents bought when property was cheaper. It’s taught me how much the world has changed and it’s hard not to draw parallels between their experiences and mine.
“I feel like I’m losing out on the sense of security and pride that owning a home would provide.”
Robin Edwards, a partner at Curetons Property Finders, isn’t surprised by how many young people feel disillusioned by the current market. “Mortgages are becoming increasingly unattainable,” he says. “Along with the rising interest rates, there are stricter affordability criteria imposed by lenders which means that even those who have managed to save for a deposit may struggle to get a mortgage.
“It’ll be even harder in areas where house prices are disproportionately high compared to average incomes, such as London and the South East.
“Many young people are choosing to live at home because the cost of rent has also skyrocketed, making it nearly impossible to save for a deposit while covering the monthly outgoings.”
Sarah Beeny, a TV presenter and property expert, told The i Paper that her two sons, 20 and 18, live at home and she’s in no rush for them to move out, wondering if it is even the best option for them.
“I’ve just turned 53 and my generation was obsessed with home ownership,” Beeny says. “Success was basically buying a house. There was lots of factors involved and those seismic changes just aren’t the same anymore. There was a big push at the time. Maggie Thatcher was keen to get people to want to buy their own homes. It was a systematic privatisation.”
In one of her new podcast episodes with her children, Seriously?, they spoke about homes, and why it isn’t the epitome of success anymore. She told The i Paper: “My sons are certainly not as obsessed in a way that I was. There’s a very good argument to say owning a property is just renting from a bank. Unless you pay off the mortgage, you’re paying interest and doing all the maintenance on it. You might as well rent it from someone else and they do the maintenance.
“I’ve got friends who have never owned a home. They rent properties and have savings. You can rent an amazing home in the country for far less than it would cost to buy.”
Beeny purchased her first flat when she was 19 on a shared mortgage with her husband, boyfriend at the time, and brother. “It wasn’t easy, the flat was condensed and the three of us shared the mortgage. We had 8 per cent interest rates at the time. But it was easier to get mortgages in those days, to be really honest.”
If she was young now, she doesn’t think she’d buy a home. “You’re only on this planet once, life will go on, and if you do buy you may own the home for 15 or 20 years. I’m old enough to see the markets just go round in circles. I’m not sure we’re going to see the crashes that people sometimes talk about because how does that work? Sixty per cent of the country are in negative equity. Economically it’s ridiculous to suppose that’s going to happen.”
Another factor is that young people can stay home for many years longer than they used to. “There’s been a generational shift,” she says. “When I was a child you were expected to leave home at 18 at the latest and then come back for Sunday lunch three times a year. I don’t think it’s a terrible thing that 18-year-olds don’t want to leave. I think that’s OK. My eldest sons live at home and I don’t want them to leave.”
Nineteen-year-old Emma Smith* is one of those young people living at home and giving up on the home ownership dream. She’s been a supermarket manager on £1,900 a month since she was 16 and by having no bills and keeping herself to a tight budget she’s managed to save £20,000.
“Home ownership was always the goal, that’s why I’ve skipped so many meet-ups and holidays with friends,” she says. “Now that buying seems impossible, I regret missing out on so many things and memories I could have made.
“I’d be buying alone which is a nightmare. I find it easy to save £1,000 a month but that won’t cover my mortgage payments and bills. Any more than that my life would be consumed by mortgage payments. I’d be living in a house I can’t furnish let alone afford wi-fi or petrol to get to work.”
Smith* grew up in a council home with her mother and four siblings and would have been the first in her family to have a mortgage. “I really don’t want to rent. I’m getting older and feel a huge burden that in the next few years I’ll need my own place and I’ll be stuck in the renting cycle forever.
“I don’t have the luxury of getting financial help from my parents like many of my friends do. They’re relying on inheritance or handouts, and although I’m happy for them, I’m jealous I have to do it alone in this economy.”
Others, like 26-year-old Sam Cooper, had their hopes dashed when talking to mortgage advisers. As a director of a marketing company, Cooper managed to save £11,000 after a good year of business and from trading cryptocurrency. He was proud that he had 5 per cent of a £200,000 flat he wanted in West Sussex but when he sat down with his local broker they told him he’d be able to afford nothing more than a shed.
“The interest rates available were incredibly high so not only were the monthly payments a lot but the money wasn’t even going towards paying off the loan, it was just going on the interest,” he says.
After the appointment Cooper realised home ownership was an impossible dream. “At that moment I should have been sensible and saved for another year but I’m not a sensible person. I went straight onto Auto Trader and looked at what car I could buy for my money and got an old Maserati instead. It does make a nice noise.”
Cooper, Cottrell and Smith want to buy places alone, which makes it harder, with only one income to meet the monthly bills. It’s likely to be many years before they will be able to own. In the meantime, they’re keeping a close eye on the housing market.
“We need more affordable housing targeted specifically at first-time buyers and a broader conversation about income equality to ensure young people can see a viable path to home ownership,” says Edwards.
“Without these measures the dream of owning a home will continue to remain out of reach for most young people.”
*Name changed to protect identity
