There is a lot of pressure for young people to buy their own homes – specifically from older family members. Many people think renting is a waste of money when you could be investing in your future. And by future, they mean a long-term home that you own.
The property market has changed dramatically in the last thirty years. It is an entirely different ballgame to buy a house now, compared to the 1990s. Inflation rates and mortgage repayments are sky high, while interest rates and home inventory is at an all-time low.
It’s challenging to purchase a home, even with a stable career and income. At this rate, we will be saving money for a house deposit for another decade before we can buy a property. Finding homes for sale in your area can help you get a feel for the property market right now.
Let’s take a closer at how the property market has changed since our parents’ generation.
An interest rate is an amount a lender charges you for borrowing money. If you take out a mortgage, you will then be charged an interest rate on the amount loaned. A number of factors can impact interest rates – from your personal finances to the national economy. You can have a mortgage with a fixed or adjustable rate.
Some people even offer a combination of the two. The interest rate will determine how much you need to pay for borrowing money to buy your property. A lower interest rate will drive up house prices, increase demand and make it near impossible for you to find a home.
As inflation rises, the price of everything rises too. House prices increase, and it becomes more difficult to secure a property for yourself. For example, you might have been able to afford a two-bedroom flat a few years ago – but with inflation, you can only afford a one-bed now.
Equally, if you already have a home and a fixed low-interest mortgage – your property will go up in value as your mortgage repayments stay the same. You can sell your property in a few years for a good profit. Unfortunately, this only benefits you if you already own a property. The parents win again.
Higher mortgage repayments
Mortgage repayments can increase as inflation soars ahead. You could end up paying more money on your mortgage if you don’t have a fixed-rate mortgage. Fluctuations can catch people out and leave them struggling to pay their mortgage.
Home inventory is low
The pandemic led to some major lifestyle changes, and many people were hesitant to sell their homes. Construction sites also had to pause all work on new builds during lockdown. At the height of the pandemic, there was an extremely low housing inventory.
It’s okay if you haven’t bought your dream home yet. The real estate market is extremely challenging right now.