The next generation of homebuyers could be in for a shock, as the latest research from Halifax found that many youngsters expected to snap up their first property for just £50,000.
A survey of over 1,000 young people aged between 11 and 21 revealed they had little idea of how much a house actually costs, or how long it would take them to save for a deposit.
The research found a third of children aged 11 to 14 are banking on their parents giving them the cash they need to buy their first home, with one in five believing they would be able to borrow unlimited amounts to buy a home. While an optimistic 21 per cent of 18 to 21-year-olds think the Government will help them on to the housing ladder.
One fifth also vastly underestimated the cost of becoming a homeowner, as they expect to be able to purchase a home in London for between £50,000 to £200,000. But, in reality the typical first-time buyer property in the capital costs in excess of £420,000.
A quarter of men in the 18 to 21 age bracket also think they will only need to save between £5,000 and £10,000 for a deposit – significantly short of the £32,321 actually put down by first-time buyers. And despite underestimating the size of the deposit they would need, a quarter of those aged 15 to 17 expected it to take them 20 years to save for one.
Stamp duty also seemed to be a mystery, with 10 per cent of 18 to 21-year-olds thinking the tax related to posting letters. And there was considerable confusion about the home buying process itself, with one in six older teens expecting it to take a year to complete a purchase.
Unsurprisingly, the survey found that members of Generation Z were most likely to turn to the internet to buy a property with 36 per cent expecting to find their perfect pad online, while 33 per cent said they would visit an estate agent, and 27 per cent thought a bank would help them find a home.
Surprisingly though, the survey found that once they've moved into their new home, today’s youngsters consider meeting their new neighbours a higher priority than getting WiFi installed. 12 per cent also felt that buying a sofa was more important than having a housewarming party.
But many were not anticipating the long haul of repaying their mortgage, with a fifth of 18 to 20-year-olds counting on receiving an inheritance to clear their loan. And despite their lack of knowledge, nearly six out of 10 18 to 21-year-olds said they thought it was very important to own a home.
Russell Galley, Managing Director, Halifax, said:
“Despite being one of the most important financial decisions we’re ever likely to make, becoming a homeowner feels like a mystery for Generation Z who will soon be thinking about flying the nest. Although our research found that the vast majority of 11 to 14-year-olds understand what a mortgage is, one in 10 aged 18 to 21 think Stamp Duty is money to pay for stamps – so there’s clearly a job for all of us to help kids get a better idea of what’s involved with taking the first step on to the property ladder.”