Saving to buy a house is just one of several burdens placed upon household finances today, says the ING International Survey “Saving priorities reflect ownership challenge”, which asked respondents on whether they prioritise saving for five specific goals, over saving to buy a home. 15,000 people in 15 countries were surveyed.
The results show the percentage of non-owners currently renting or living with friends or family, and therefore who might be considered most likely to be potential first-home buyers, who said at least one of our alternatives was more important than saving to buy a home.
On average, four in five Europeans say housing isn’t their top priority right now. Romania, which has a comparatively high 96% home ownership rate, has the smallest group (56%) who say they place at least one other financial goal above saving for a home.
Germany, a country with a relatively high percentage of renters, perhaps due to high-quality rental housing or effective regulation of the rental market, has the largest group (91%) who prioritise at least one other spending alternative.
So, it means Romanians are the most interested in saving money to buy a house among all Europeans.
84% of Romanians consider is the most cost-effective to purchase their own house/apartment than living as tenants (against the European average share of 70%).
28% of Romanians forecast they they will buy their own house when they are 30 to 34 years old, 25% -after they turn 35 and 14% before the age of 30.
21% of them think they will never be able to buy a house (the lowest percentage after Spaniards).
As for the European average, only 7 pc expect to buy a house before turning 30, 16% after 35 years old, while 38% are pessimistic about this goal.
Of those who rent and have never owned, 38% in Europe say they don’t expect to be able to buy. This is most largely felt in Netherlands (48%); Belgium (45%); Germany (43%); France (40%); Australia (39%); and the UK (39%). Those who do expect to eventually own a house appear to accept this will more likely come later in life. A quarter (27%) of 25-34-year olds who are currently renting and have never owned, anticipate having to wait until they are older than 35 before buying. Indeed, the median age of first-home buyers in the US was 47 in 2019.
High prices and debt hang heavy for non-owners of all ages
Taking on large amounts of debt to buy a home is among one of the biggest concerns of those yet to buy and is cited by 70% of Europeans who rent and have never owned. It ranks second only to high property prices, cited by 77% of renting non-owners. Today’s low interest rate environment makes borrowing an attractive option, but if rates begin to rise, monthly mortgage payments could become less affordable for many. The percentage of those agreeing that the fear of debt plays a major factor in their housing options deviates very little across ages, despite younger people arguably having longer to manage repayments and making up a larger portion of the renters asked.
Only 16% of the respondents don’t want to buy a house at all. Spaniards (45%), Dutch (42%) and Germans (37%) consider that inefficient measures and provisions have an impact on the existing real estate market. 53% of the Romanians think that the local real estate is heading to a wrong direction (as against 35% in 2017), below the European average rate though (55%).
The Spanish (45%), Dutch (42%) and Germans (37%) are among the most willing to point the finger towards regulation. Italians (15%), Poles (24%) and Belgians (25%) are the least critical. While many governments have put schemes and incentives in place to assist and encourage first-time buyers, people evidently still consider it a challenge.
The right track believers are primarily focused on making financial returns from property, with 46% reasoning they can rely on the housing market to provide good investment opportunities. Thirtynine percent also say it offers numerous opportunities to make investments. Unsurprisingly, people who own a home and therefore have the potential to make a return on property price increases, are more inclined to say their country is on the right track compared to renters who have never owned before (33% v 18%). Owners are less likely to say the housing market in their country is on the wrong track (50% v 61%).
Owning considered better for the wallet. And the head
On average, 70% of Europeans consider owning a property financially preferable to renting. This is a common opinion cast across all age groups. Even 68% of 18-24-year olds — the demographic least likely to have experience buying a home — say ownership is preferable to renting from a financial perspective. Across countries, the view becomes slightly more diverse. For example, just 58% in Germany and 59% in the Netherlands, agree with this statement. This is reflected in comparatively low home ownership figures in these countries. It also contrasts with the 84% of Romanians and 82% of Czechs that say owning has a greater financial benefit. These both have relatively high rates of home ownership.
Does owning benefit well-being? While it may be difficult to argue against the financial benefits of owning a property, assuming property prices continue to rise, there could also be reason to believe it brings a sense of well-being. Researchers from the University of North Carolina suggested in 2014 that owning a home can bring residential stability, perceived control over your life and provide a social identity. Such feelings grow with levels of home equity and the kind of home you own. So, while the benefits may be wider than pure economics, they may also take a little time to be fully realised.