If you are a millennial and plane to buy a home, start thinking early about the personal and financial sacrifices you are ready to make, argues a new study.
More than half the 18 to 30 age group have to make some vital decisions about how they spend their money if they want to own a home, says the global study by HSBC Bank.
Researchers spoke to millennials in nine countries to find out what they would give up to own a home.
Most (55%) would spend less on going out, while a third would compromise on size to gain a foothold on the property ladder.
Other sacrifices include:
- Delay having children (21%)
- Renting out a bedroom to a lodger (21%)
- Buying with a relative other than a partner or spouse (18%)
- Buying in a second choice location (18%)
- Living with a relative to save for a deposit (17%)
- Buying with a friend (11%)
Banking on mum and dad
Asking parents for financial help is also popular, especially in the United Arab Emirates (50%) and France (26%).
In the US, 28% of millennials live with their parents while saving for a home deposit, compared to 6% in the UAE.
The report Beyond The Bricks recommends four steps a millennial can take to make their home ownership dream a reality.
- Start saving early and do not underestimate the deposit and costs of buying on top of the house price
- Set a budget that covers extras like furnishings and redecorating
- Think about the sacrifices you can make to speed up saving
- Consider a mortgage as part of a wider financial plan rather than a single transaction
Cutting spending
“Consider cutting back on your day-to-day spending. Think outside the box about what could help you to buy a home, such as buying with a family member or friend,” says the report.
HSBC says 40% of millennials own their own home worldwide and four out of five who do not own a home want to buy within five years.
“With 64% of millennials who don’t own a home needing a higher salary before they can buy, the combination of slow salary growth and rising property prices makes it unlikely that all will be able to achieve their goal,” said the report.
The study covered 9,000 people in countries including China, the USA, Australia and the UAE.