UKMay 23 2018

House deposit is fifth on millennials' savings goals list

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House deposit is fifth on millennials' savings goals list

A deposit for a house comes fifth on millennial's lists of savings goals.

Website Top Cash Back investigated millennials' expectations of owning a house and found although 95 per cent would like to buy a house in the future, a massive 31 per cent do not think it will happen and 29 per cent said they are only hopeful about their chances.

Just 39 per cent of the 1,460 millennials (those born between 1977 and 1995) surveyed in March are sure they will buy a property.

The uncertainty as to whether they will be able to invest in bricks and mortar means millennials are focusing on financial security and life experiences as savings goals instead.

That is why only 35 per cent of millennials said a deposit for a house is their main saving goal.

This is trumped by building an emergency fund for 51 per cent of young people, and a savings cushion  for 43 per cent.

Meanwhile, 40 per cent save to achieve financial freedom, and a massive 37 per cent want to save money to travel and go on holiday regularly.

Natasha Rachel Smith, consumer money expert for Top Cash Back, said: "Our research shows millennials are being sensible with their money and thinking about financial security.

"However, the current economic climate, and a change in lifestyle – people marrying and having children later – means millennials are favouring experiences over possessions and have different financial priorities at this point in their lives. 

"While it may be later in life and less of a priority than it was in the past, it is important for millennials to put money aside regularly and be savvy with their spending, so they are prepared when the opportunity to buy a property does arise."

Even from millennials who are optimistic about getting on the property ladder, just 47 per cent think it will happen in the next five years.

The data found 64 per cent worry about the cost of housing rising quicker than salaries, while 56 per cent fear they are not earning enough money for a deposit.

Also, 37 per cent said living costs are too high for them to save is giving them doubt about getting on the property ladder sooner rather than later.

Daniel Bailey, principal at Derbyshire-based Middleton Finance, said for many first-time buyers getting on the property ladder is a pipe dream. 

He said: "The property market is very regional. Some parts of the UK are easier than others to get on the ladder, mainly due to property prices.

"In my experience the deposit has always been an issue for first-time buyers. Many find it extremely hard to save for the deposit that is required.

"I have seen an increase in the overall mortgage term from your typical 25 years to 30 and 35 years. This is mainly due to making the mortgage affordable."

aamina.zafar@ft.com