Affordable homes are becoming further out of reach of first time buyers across Europe with 35% expecting never to be able to buy their own home, a new study shows.
Some 63% in Europe expect property prices to increase over the next year and 53% say their country is on the wrong track with housing, up from 45% last year, according to the research from ING.
The survey, which covers nearly 15,000 people across 13 countries in Europe also found that the number who think their local housing market is on the wrong track has increased in the vast majority of countries. Only a quarter of Europeans say housing is on the right track in their country.
Commonly, property prices are linked to and influenced by local market conditions. Yet it’s clear that many in Europe feel that house prices where they live are too high, the report suggests.
Some 57% believe that housing is expensive, while 25% says they are finding it difficult to pay their rent or mortgage each month. Renters are more likely than home owners to characterise property in their country as expensive at 62% vs 55%, or unfair at 32% vs 22%.
Over the last decade, interest rates have been low, which has helped increase property prices but made it harder for newcomers to enter the housing market. Now, 72% in Europe believe it is difficult for first time buyers to get on the property ladder.
Over a third, 35%, of non-home owners in Europe don’t expect to ever own a house. The largest shares who say this are in Germany at 45%, Italy at 44% and the UK at 41%.
And the study reveals that only 9% now expects to own a first home by the time he or she turns 30. By comparison, 60% of those who already own a property bought before age 30.
People cite many reasons for not being able to buy, but most point to issues around affordability. Some 56% of Europeans blame it on insufficient incomes, while 19% anticipate prices will stay too high, and 165 indicate a lack of long term job security.
‘Getting a foot on the property ladder appears just as important as it has ever been, both emotionally and financially. But many who do not own expect that home ownership will happen at a later age than for those already settled,’ said Jessica Exton, behavioural scientist at ING.
‘While a sizeable minority think they will never have a place to call their own. It is therefore not surprising a majority consider housing to be on the wrong track, an opinion that is shared across the 15 countries surveyed, despite economic and cultural differences,’ she explained.
‘Whether old or young, owner or not, there is recognition that owning a property is now more difficult than in the past and likely to occur later in life. Affordability is the main hurdle but the next most common characteristic describing housing markets is that they are unfair. This may be cause for a re-think on how we organise property in our society,’ she concluded.
According to James Knightley, chief international economist at ING, said while the housing market is typically associated with a strong consumer sector, that was when home ownership was broader and more people could feel the wealth benefits of higher house prices.
‘With so many young buyers priced out of the market, either having to spend a significant proportion of their income on rent or live with parents, ownership rates are falling fast. As such, the economic boost from a strong housing market is becoming less clear cut,’ he said.
‘Moreover, the fact that so many respondents suggest their countries are on the wrong track with housing should be a wake-up call for mainstream politicians, who are already on the back foot against a growing populist political tide,’ he added.
