Today’s private rental figures further highlight the financial pressures facing millennials in the UK - longer-term rental and property rises are outpacing wage rises. Aviva comments.
- Owning a home is the number one financial priority for millennials, yet over a third (35%) believe they have been priced out of the property market
- Despite these pressures, millennials continue to hold a desire to plan for the longer-term
- Government policy is recognising the need for help, but it is too soon to declare victory
Today’s figures show that private housing rental prices rose by 2.3% in the year to October 20161 – in South East the rise was 3.4%. This comes at a time when wages are reported to have increased by 2.4%2 - only marginally ahead of rental rises. Over the past four years, the average increase in rental price was 2.2%, outpacing the average increase in wages at 1.7%. The most recent house price data showed that property prices rose by 7.7% over the same period3 – in the South East the rise was 9.9%. Over the past four years, house prices rises have averaged 5.6%. Wages are struggling to keep pace with the property market.
These dynamics are changing the shape of property ownership in the UK. In 1991, 67% of the 25 to 34 age group were homeowners. By the financial year ending 2014, this had nearly halved to 36%.4
Average rises over past four years (September 2012 to date):
| Wages | Private rental prices | House prices |
| 1.7% | 2.2% | 5.6% |
This data comes at the same time as Aviva research5 finds that the desire to own their own home is the number one financial priority for millennials. Yet more than one-in-three (35%)fear their generation has been priced out of the housing market.
Aviva research: Millennials’ attitudes towards property
| My home is my number one financial priority | 61% |
| My generation has been priced out the property market | 35% |
Despite these significant pressures, millennials also report a desire to plan for the long-term. Aviva research finds that millennials want to prioritise long-term saving (49%) over short-term spending (33%).
Aviva research: Millennials – savers or spenders
| I prioritise long-term saving | 49% |
| I prioritise short-term spending | 33% |
Public policy is reacting to the challenges – but it is too soon to declare victory
Public policy acknowledges the challenges, and initial actions are being taken, but it is too soon to declare victory.
Autumn statement
Yesterday’s Autumn Statement included measures to fund up to 100,000 new homes over the next five years and proposals to ban letting agent’s fees in the rental market. The direction of travel is positive, but these figures need to be seen in context. There are over 25 million homes in the UK today, and many report a need for over 200,000 new homes every year to keep pace with demand. More action is needed.
Pensions auto-enrolment
The existing policy of pensions auto-enrolment is bringing millions of workers into the workplace pensions market. This is positive, but while participation may be heading in the right direction many recognise that the level of saving is still insufficient to meet long-term needs. More action is needed. The Government will review auto-enrolment in 2017 and Aviva published its 10 point plan for auto-enrolment on 15 November.
Commenting on today’s data, Alistair McQueen, Savings and Retirement Manager at Aviva said:
“The UK has a property and pensions crisis - there is insufficient property and pension saving to meet our future needs. The crisis is most acute for today’s millennial population.
“The latest official figures highlight that wages are struggling to keep pace with property and rental rises. Millennials are also struggling to keep pace.
“The crisis is recognised and initial actions have been agreed. For property, yesterday’s Autumn Statement flagged a commitment to fund up to 100,000 new houses and an further 40,000 affordable homes, in addition to banning letting agent’s fees. For pensions, the existing policy of auto-enrolment will continue to introduce millions of new workers to workplace pensions. The direction-of-travel is correct, but we have a long way to go before we can declare victory.”
-ENDS-
If you are a journalist and would like further information, please contact:
Aviva Press Office: Fiona Whytock: 07800 692 299 or fiona.whytock@aviva.co.uk
Aviva’s retirement spokesperson, Alistair McQueen, is available for comment/interview
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