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How Millennials and First Time Buyers Invest in Property

by | Apr 13, 2019

First time buyers are focused on the bottom line. Cool Heads: Millennials Investing in Property shows key steps 20-30 something investors take when buying and why.

Surveys show that financial considerations are the number one reason to buy a property as opposed to emotional or practical considerations. They are wealth creators and growers.


  • The Bottom Line
  • Wish List – Millennials Investing in Property
  • Cool Heads – Fewer Millennials are Buying
  • Millennials not Buying
  • Millennials Investing – From Renting to Buying
  • Delayed Marriage Pushaes Back Decisions
  • Parents with Portfolio

And they are more eager to buy and own their property than their parents or grand parents, even if it has become more challenging.

The financial crash in 2007/8 which was started by the sub prime property market, has placed home owning under the microscope.

While lenders and some buyers were playing roulette with the market and their own homes in the boom times of the early 00’s, today’s young buyers are looking for a sound financial foundation. They want to get it right property wise before making offers.

Wish List – Millennials investing in Property

Owning, as opposed to renting, is still top of their wish list. Yet, even as they embark on their home search they are well informed and creative in their way they fund their buys.

The internet, raised awareness around property and finance have sharpened their focus.

Furthermore, job security as experienced by previous generations, who stayed in the same employment for years and sometimes a lifetime, is disappearing. More people are working freelance or on short terms contracts.

Many are also hampered by student loans – another obstacle unknown to older generations.

With Today, a home is the one constant in the life for those who can afford to buy. It is an investment as much as a home. And the millennials are genius at finding ways to sponsor a purchase, be it through family, government schemes, crowdfunding or other creative ways.

The rise in social media and sharing of interior design photos have also wetted the appetite for ownership among millennials.

Key Features Millennials look for when they invest in property:

  • Transport links
  • Local amenities – particularly the social aspect
  • Service charges or other variables attached to the property
  • Outdoor space however small
  • Entertainment space however small
  • Smart home features
  • Work space

Cool Heads required – Fewer Millennials are buying

However, while today’s first time buyers are sharp with the budget, they are also older than previous generations. Because it it more difficult to get on to the property ladder. They need time to save up or get financing.

And they are fewer in numbers. Psychologically, as well as financially, it can feel like a leap of faith to jump into the market with financing, rules and regulations ever more diverse.

It is simply a more complex process and can feel daunting to start talks with financial advisers, brokers, estate agents and lawyers. There are so many more options – opportunities as well as pitfalls – that it may feel safer to carry on renting.

Millennials not buying Homes

The generation which came before Generation Y (ie, Generation X) was lucky – the opportunities to invest and build a property portfolio cheaply and quickly just 15 years ago almost defy belief today, given today’s climate.

Buy-to-let, easy 100% plus mortgages, almost no questions asked and fewer answers checked. But that booming economy was also what contributed to the strict rules and checks the 20 and 30-something find today.

But the level of deposit or down payment required – usually between 10% – 40% of the agreed price – stops many young people from even thinking about property owning.

The rise of the gig-economy making a steady income flow, which banks prefer when lending, more difficult to to achieve has also shaken up the buying pattern.

It’s easier and cheaper to travel now than it was twenty years ago before budget airlines arrived – young people are making the most of this and today this sense of freedom and adventure holds people back from settling in one place, in a house or apartment with an expensive mortgage.

Student loans are also a relatively new concept – certainly in its current form – which is a barrier to investing and additional borrowing.

Millennials investing – Going from renting to buying

Those who do make the decision to buy are also less panicky than previous generations of home buyers. They’re older with greater life experience, are better informed on the market and the buying process and they have the internet at their finger tips.

5 Good reasons for millennials to make the shift from renting to investing in property:

  • Financial – to have an asset and build wealth while interest rates are at historical lows, tax advantages
  • Power over their home – the ability to make decisions on upkeep and personalise decor
  • Peace of mind – being the one to decide how long they stay and when to move on
  • Social – having a vested interest in the neighbourhood and a sense of belonging to a community
  • Emotional – a sense of responsibility and pride

Others are left scared by negative property news, volatility in the market which affects interest rates and the commitment it is to own a home.

In times of change and uncertainty, commitment can be a red flag to some. But they may not realise the opportunities that come with ownership, such as appreciation and potential rental income.

Perhaps the greatest obstacle home buyers face is the deposit and loans. This is particularly tough for first time buyers and millennials with fewer savings and student loans.

The booming house prices over the past 20 years have seen deposits required too have shot up.

Furthermore, lenders used to ask for 5 percent upfront, but are now increasingly demanding 10 percent of the property value. That is partly to do with the sub prime shock.

Back then lenders offered mortgages to people who didn’t have money to re-pay the mortgage let alone the deposit.

Cool Heads – Delayed Marriage pushes back buying Decisions

And fewer millennial homeowners puts pressure on the rental market which in turn pushes up rents and eat into prospective buyers’ savings pots set aside for deposits and down payments.

Delayed marriage has also pushed back home ownership among millennials as they focus on education, travel or enjoying a flexible lifestyle with fewer strings.

This is where the millennial generation has faced some criticism – their lifestyle. Some of their elders have criticised their lifestyle choices.

Yes and no. Millennials are enjoying a lifestyle that is quite different from their parents. House or flat-sharing in the 1980s was a very different ball game to what it is like now.

Twenty-somethings and 30-something flat-sharers have grown up with mobile phones, flat screens, sometimes portered apartment blocks, health and safety regulated furniture and even cleaners.

Their parents were popping coins in phone booths, at the same age. They slept on well-worn mattresses and drank instant coffee from mugs a flat mate hadn’t bothered to wash up properly – by hand and not in the dish washer as millennials are more used to.

For more tips on what to look out for when buying a home read also our blog First Time Home Buying: What to Ask Estate Agents.

Parents with Portfolio – Millennials investing in Property

Yet, it is the parent generation which sits on property portfolios built with easy money and a healthier supply and demand ratio.

Times have changed and in years to come the divide between those who bought and those who carried on renting may prove to be stark.

Those whose wealth has grown because their asset has appreciated and those who have spent money on rent, effectively propping up another buyer’s asset.


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