A study of more than 10,000 people across nine countries showed millennials had a positive attitude to homeownership even though many were exposed to inflated house prices benefitting previous generations.
Out of the nine countries in the survey carried out by HSBC, the UK ranked eighth in the percentage of young people aspiring to get on the ladder.
This is not surprising given the rate of house price inflation in the UK compared to real salary growth.
Boom, bust, boom
The millennial generation is said to be born approximately between 1980 and 2000. In Britain, during that time there has been a boom, bust, boom cycle – before the market crashed again in 2008 and salary inflation became stagnant. Between 1997 and 2016, the average house price soared by 259% while salaries rose just 68%, research from the Office of National Statistics revealed.
Tracie Pearce, HSBC UK’s head of mortgages, said: “This study challenges the myth that the homeownership dream is dead for millennials in the UK. They face a two-pronged problem of rising house prices and slow salary growth meaning the dream of homeownership is a challenge but not unachievable.”
Last year, UK house price inflation rose to 7.5% while salaries are projected to grow by just 1.9%, in real terms, in 2017. The research revealed Canada was the closest runner to the UK when it came to house price inflation, with an annual rate of 7.4% and an even lower rate of salary growth, predicted to be 0.9% this year. This has not deterred Canadian millennials from their dream of homeownership, however, as 82% said they intended to buy in the next five years.
Some 80% of US millennials who said they intended to a buy home are facing more favourable housing market conditions than their British counterparts. Last year, US house prices grew by 4.8% while wages are forecast to rise by 1.9% this year.
The French millennial appears less enthusiastic to buy a home even though their wage growth is outperforming property price prices. House prices in France rose by 0.6% in 2016, with incomes predicted to increase by 1.5%.
Malaysian and Mexican millennials were the most keen to buy a their own home, with 94% recorded for both countries, closely followed by China with 91% of respondents intending to buy.
Some 31% of British millennials had already bought a property, compared to the global average of 40%. China ranked highest with 70% of its millennials already on the ladder, while Mexico and France ranked second and third, at 46% and 41% respectively.