I recently came across an interesting piece from Splittable on how life in London has changed from 1996 to today. The piece concentrates on what the changes mean for millennial’s; those born between 1983 and 2001. The below infographic shows that whilst life in general has improved for the youth of London today due to the advancement of technology, the financial strain being put on them is now more than it was in 1996. Prices on items such as housing, food and entertainment has far outstripped inflation and it looks like this trend is only likely to continue.
Click here to see the inforgraphic of how London has changed over the years.
Housing – The biggest change that has led to generation Rent
Whilst the infographic above is great, it doesn’t paint a true picture on items such as housing. For millennials today, getting a decent house to live in is the biggest issue as rents and house prices have soared. Just look at the following statistics:
- Just to prevent the housing crises in London getting worse, 50,000 homes need to be built annually. The amount built last year, only 242,30. This indicates that the problem will only get worse. Housing is considered the biggest issue facing Londoners.
- The average rent for a 2 bedroom flat is £1,400. In Manchester for instance, it is half that. Likewise in the Midlands. In other parts of the country, it is even much less. This is why I am able to invest a lot of money in cash generating assets. My mates always wonder how I am able to cock away so much into an ISA for my age but the amount I put away is simply equivalent to the amount they pay in extortionate rent.
- It has become so difficult to get mortgages that the Bank of Mum and Dad (BOMAD) has become a top 10 mortgage provider. In 2015, BOMAD provided £5 billion in loans widening the wealth gap even more. Don’t underestimate the importance of FaceTiming with the parents.
- Renting has become the norm and many have no hope of ever buying with the average price of purchasing a home in London over £500k. This is how millennials got nicknamed, Generation Rent. No matter the location, it’s no wonder why many people (not only millennials either) require some form of rent assistance considering rental rates nowadays.
Why is housing in London so expensive?
Everyone knows that house prices in London are over-inflated and rents are just as sky high, but most people don’t really know the cause of the current housing crises. As amazing and beautiful as a lot of properties that can be found on places like Space station are, there is no denying that a lot of housing in London is rather overpriced, although I’m not sure that this can be said about some of the apartments on there. Of course, people have to remember that they are in the capital of the UK, so it will be more expensive. If anyone is planning on moving into London, it might be worth looking into UK bridging loans to help homeowners find their next home whilst their current one is on the market. London homes, although expensive, do sell quickly. Bare this in mind if you’re moving over there. There are many reasons I have come across which have moulded the current London housing market. Some of them are below:
Cheap money, in the form of low interest rates, has led to people speculating on both BTLs and Hedge Funds on shares. The worrying thing is that mortgage rates can go even lower!
The majority of Council Housing stock has been sold off over the past 25+ years and the sale of these integral propeties is still going on. If a Housing corporation builds new housing etc, the tenant has the right after two years to buy the house at a discounted price – in some cases less then the mortgage that the Housing Corporation raised. To build the property, they borrow against the total value of ALL their property portfolio. This is economic madness.
Population Growth. London’s population grows faster than the UK national average and the supply of new houses and apartments. This growth is causing many residents to look at garages to rent in London. As the streets become every more populated. By 2025, the population should hit 9.5 million and 11.3 million by 2050.
A lot of the property owned by foreign landlords are empty. They even avoid paying council tax on their empty properties due to them making it uninhabitable by removing the toilet, bath etc. If a property is uninhabitable, no council tax needs to be made. Houses are becoming giant safety deposit boxes for the rich.
What you can do
The obvious thing to do is to move out of London. Just kidding! I have written a number of articles which can help you live cheaply or earn extra money from your property. By reading these articles, I am hoping you can find accommodation at a good price or are able to earn some money to subsidise your cost of living.
- You can become a property guardian and pay cheap rent.
- Rent out (storage) space in your property to earn some cash.
- Rent out your driveway or car parking space using Justpark.
- If you own a home, rent out a room on Airbnb to help pay your mortgage.
I will just leave you with the following post from Mappinglondon.co.uk. It shows the prices of houses for different boroughs in London.