Aside from affordability and the housing crisis, a lot of young people tend to move to cities like London, Bristol or Manchester after graduating and house share until their late twenties. Some of these can buy, many of these can’t – but it seems to be a thing that people will look to stay in cities and rent until they marry (and then buy, start a family once they can).
For many people, if they can afford to buy, does it make sense to? Besides that, would more buy if they could, even if that meant moving out of London into somewhere nearby but more affordable (the commuter belt), say? Or does it just destroy your social life? Does anyone have personal experience?
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A very small percentage of people can afford to buy a property straight off the back of graduation, especially in either of those 3 cities you mentioned. I don’t know anyone that got onto the ladder straight out of uni. I’m in my late 20s and maybe know 3 or 4 people who own their home out of dozens of friends
Tbf once I graduate I work 50-60 hours a week, live modestly and work to spare my deposit and just get done with it asap. No matter how tiring it will be, if it is to own a property in the end, it’s worth it to me.
I’d say buying asap
I’ll never understand the rush and obsession with buying property in this country.
Since house prices seem to double every decade and wages do not, if that continues then it makes sense to buy a house as soon as possible since it’s a decent assumption that the salary to house price ratio will be worse in a few years time than it is now.
Completely anecdotal but the handful of people who I know who I’d say are very financially successful got to their position through property investments.
Sadly no job is a “job for life” any more, so if you’ve got the sort of job that would likely require you to move to a different city if you changed employer, you’ll regret buying a home only to have to sell up again.
Assuming you’ve not got other ties to the city you’re in, that is (family, partner’s job, kids in schools, etc)
I mean if you can buy then do it. Social life doesn’t work if you’re broke and can’t go out to spend it.
To paraphrase the financial journalist Guy Anker who was talking about house prices and long mortgages on ‘The Week Unwrapped’ podcast last week: while no-one can predict the future, all available evidence says that in the UK people who buy earlier in life, tend to live a more financially secure life than those who don’t. If you’re thinking only about financial sense, then yes buying sooner is almost definitely the best decision.
On the social life element: yes, being in the centre of a large city through your 20s will increase the options available for you, though probably less so than it did 20 years ago as so many young people have already been driven out. I don’t think that the commuter belt makes much sense in your 20s though. It’s not much more affordable than being in an expensive city, and you lose the social life without normally taking the benefits that people in their 30s and 40s are seeking (schools, gardens, etc). It’s probably more of a choice between renting in a popular city, or buying in a more affordable one (Cardiff, Newcastle, etc). If you can do the latter, then you can probably find a sweet-spot between living near(ish) to the centre of a city, and getting on the property ladder.
In my home town, I own a flat and pay £475pcm for the mortgage, the cheapest 1 bed in my whole town right now is £875pcm, it then goes to £900-950 for most others. You can buy a 1 bed flat for approx. £130k; if pay that back over 25 years it’s approx. £743pcm even with a high interest, so it is cheaper to actually buy in my home town than rent. The only caveat of course is the deposit of at least 5%
It doesn’t really make sense, really while you’re young you want the flexibility of being able to move around without the responsibility of an asset.
However the housing market in the UK does not make sense and there are significant disadvantages to renting which means that most people end up buying as soon as they can financially.
Personally, I moved straight to London after graduation and had a great time for 3 years socialising a lot, living with great friends I met through spareroom, spending all my income on having fun. Couldn’t afford to buy in London at that point.
Was it financially savvy, no, but it was a good time in my life where I made friends for life. I’m now early thirties following the second half of my twenties where I moved out of zone 2 London and focussed on building a deposit and I’m now buying a modest flat in zone 4. No regrets.
This is London though, which is unaffordable to most when you graduate to buy. If I was in e.g. Leeds or Nottingham, I think I’d have tried to buy asap as rent is a bad deal if you are living somewhere you can afford to buy. Mostly comes down to whether you have a deposit in lower cost of living cities.
It makes financial sense to buy as quickly as you possibly can – if you buy a flat/house at 25, you’ll stop paying for it at 50. If you rent a flat/house at 25, you’ll be paying for it until the month *after* you’re carried out in a coffin.
The moment you can, buy a house – any house/flat. You don’t have to live in it, you simply have to buy it, rent it out, and then rent where you need to live. Your tennants are paying your mortgage, and the value of the mortgage is going down, and the value of the house is (usually) going up – Every. single. month.
It just depends what you want your lifestyle to be
Having a mortgage ties you down hard. Deciding you want to move can easily be a multi year process with a mortgage. If you’re in a big chain you can be waiting years to get a move in date. I am currently in the process of selling my home. Neither side has a chain and it has still taken 7 months to get a move in date. It is long winded and expensive to do
Meanwhile renting is generally cheaper short term but more expensive in the long run. But it is a lot more flexible. Moving as a renter is infinitely easier and cheaper. If you decide you want to go on a working holiday in Australia next week you can just go and do it. You can’t just do that with a mortgage and bills to pay
Really it depends what you are optimising for. If you want to set yourself up to have the best financial future it’s better to get a flat share with the lowest possible rent while you save up a deposit. If you can live at home with parents for free for a couple of years that is even better. I understand not everybody has that privilege, but if it is an option for you it can be great
Even if you could afford it, buying a property and having a mortgage can be restrictive. You’re tied to a location and to a specific budget. I spent my early 20s after graduating trying to progress up the career ladder, and often that meant moving jobs and changing employers to chase pay rises and more seniority. I once took a small pay cut to move into a new job with better progression. I was in rentals and moving every year to account for my different circumstances. If I had a mortgage, it wouldn’t have been so easy to just switch up my life like that and I think it would have limited my career options.
I think generally it makes sense if it aligns with your overall life goals.
If you’re settled in your town/city and want your own place anyway then it makes sense to buy a property. After all, you’d rather pay your own mortgage and have a saleable asset than pay for the landlord’s, right?
I bought a house with my wife back in 2014/15 when I was 23. Got a fixer-upper so that there’d be decent value growth to allow us to climb up the ladder, and also with a mortgage that wouldn’t cripple us.
Managed to maintain a healthy social life, went on a few holidays etc and generally have been fine. Plan to move again in the next 4-6 years to a bigger property and we’ve got a fair amount of equity in the house to help with that.
If we’d have rented I think there’s a good chance we’d have had our savings eroded following the crazy rises that have happened over the years and that would have stopped us buying a house of our own.
Pros and cons
I bought a house in 2012 when I was about 22. I just made the last payment on my mortgage at the age of 35.
I had a kid when I was 21 so had to buy quick, it was tough at the time but we our reaping the benefits of settling early.
Our household income is about 70k per year, and we can save about 1500 per month now.
I would definitely do the same again, kids will be going off to uni in a few years andI’m hoping to spend the next 20-30 years not stressing about money and spending my left over income on holidays and visiting new places
We might get a slightly bigger house, as i know it will be difficult for my kids to move out so they will need a bit more space. But I wont be getting a big mortgage
Selling/buying a property is quite expensive, so the common advice is to only buy somewhere if you plan to live there at least 5+ years (or just accept the fact that any increase in equity may be eaten up by moving costs). I’d say for young people the chance of them wanting to stay in the same place and not have different needs for that long is quite unlikely, so even if they could afford to buy a place it may not be worth doing so.
It makes sense, problem may be that the area or type of place you want as a graduate may not be the same when you are older or have a family. I wanted to live more centrally in Bristol for example, then near quieter areas with pubs and shops a little further out, then bought further out again. Money-wise getting on that ladder if you can is a real bonus, but you can’t just “move house” as easily as renting if you need to arrange a sale – I would just give a month’s notice renting and move on if I didn’t like a place. Also all my stuff was covered like faulty boilers and issues with the property.
If you can buy, do it. What you’re doing by renting is usually paying someone else to buy the property for you, except they get to keep it afterwards and keep charging you for it.
I’m still at uni but have the cash to buy outright, for me, no it does not make sense to buy straight away.
Number one is I’d rather keep the money invested and just take out a large deposit 7-10 years down the line. However, if I bought asap I’d be able to get lodgers and make some money off that while I’d otherwise be house sharing anyway.
Main reason is after uni I want my 20s to be a time when I can move around, need time to find a job and career for me and be able to take better offers around the country when necessary. Buying a house would make me much more static and get me stuck in one place for years, much prefer to do that a few years down the road.
Taking the hit by renting, while not necessarily financially optimal, will likely be my best option unless I land a unicorn job right out of uni in a cheap area.
Financially it may make sense to live with parents and buy ASAP, but finances aren’t the only thing that matters. I graduated a few years ago, originally staying with parents but then renting after lockdowns ended. I could have chosen to continue staying with parents (and saved a lot more money), but I decided to live a little. I’ve since realised that the type of area I wanted to live in after lockdown isn’t actually where I’d want to buy, and have also had a lot more personal growth in general.
I think had I bought as soon as possible, it’s likely I would have made a very expensive mistake.
In general it’s better to buy if you can afford it and start on the ladder as soon as possible – but some people have good reasons not to do so. I knew a guy in uni who inherited enough money for a deposit, but he knew he didn’t plan to stay in the UK after graduation, so he invested it rather than blow his first-time buyer benefits on a house he’d end up renting or selling anyway.
If you’re in an industry where remote working is common, I’d buy a place – but for a lot of people it’s a big ask to commit to a long commute right out of university. Railcards have made it cheaper, but you never get that time back.
If you can afford it – buy don’t rent. It’s like throwing money away.
I mean people rent in cities because typically after graduating you get a job on a grad scheme with some company that is based in the city.
Whilst early in your career you’d typically be expected to be in the office all the time, especially if you have no experience as it can be better to learn how to do things in person.
As people get older they get more experience and can move to more senior roles which can have WFH, or move to smaller companies outside to city to be more senior and that would be when buying property become an option.
Also though no one is graduating with 30-40k saved up for a deposit to buy a house straight from uni.
If you can afford to buy do it. But the struggle is that it’s sometimes a trade off between being able to afford a house somewhere relatively cheap, and there being any sort of job prospects there.
Hard to beat cuccir’s post but I’ll add as someone who’s hopped around the country the flexibility of renting has been a benefit, but if you can afford within a commutable distance to the city you’re planning on working in for, well ‘ever’ then go for it
Nothing about housing makes sense. It’s a basic human need, and yet you have to pay for it. There are many homeless people, but some people own more than one home. A business with a lot of money can own homes and charge people who have very little money even more money to live in them. Having a mortgage and renting are presented as two very different things, even though they are functionally the same. Don’t try and make sense of it, just do whatever gives you the least hassle.
good luck with that
Most people can’t afford to buy straight out of uni. They need a deposit and sufficient earning power to get a mortgage for the full amount. Entry level jobs don’t usually pay enough to raise a sufficient mortgage in London, though I can’t speak to the other cities, and most people also don’t graduate university with a 10% deposit kicking around.
Renting makes no sense at all if you can buy.
As a general rule, yes. Asset investment in homes is one of the most reliable ways to grow wealth and I don’t see that changing since there isn’t nearly enough building going on to meet the demand
If you’re going to be living somewhere you know you want to stay for a long time, then look to buy but if you’re wanting some freedom to move about and try a few places then rent
I’m actually genuinely curious how I know so many people in their 20s in UK who bought. That doesn’t happen in the US
It really depends.
If you’re young and single/in a relationship but not ready to commit to a joint mortgage, it might be worth waiting longer to buy a property that will be more future proof, avoiding several thousands more on stamp duties, legal fees, etc. You generally want to buy a place with plans to stay for at least 5 years.
Alternatively, people can get significant career (and financial) boosts from the flexibility of being able to move across the country, either with their company, or changing to a new company. If you’re open to this, again it might make sense until you find a place you want to stay in for 5+ years.
But yeah, historically house prices have increased more than incomes. So if you don’t want to move across the country, and/or can already afford a property you can see yourself living in for 5 years, then it is generally worth getting onto the property ladder. Too many people could have bought but waited for a better time, and found house prices ran away from them.
If you can afford to buy, buy.
Owning a house is an investment, anything you do to improve the house, although cost money, will likely increase its resale value. More so, although house prices fluctuate, in the long term they go up.
When you rent, you’re paying for a house you’ll never own
Im in the position to buy, but iv come to realise that I kind of enjoy the flexibility, I know its not everyones cup of tea but in the last year, iv had a look at 5 locations and just as I decide thats the one, i begin to like another 😂 I work from home and my other half is a teacher, so we are lucky enough that we could move up north for example, and still live without having to find new jobs and what not
If its a possibility the best idea is to put your student loan towards a deposit and buy when you start your degree
Otherwise yes ASAP it’s a saturated market and they’re not making more land
If you can afford it straight out of graduation buying is always better than renting. London, Bristol and large parts of Manchester are out of reach for virtually everyone who just graduated though
One thing I wish I’d done was prioritising getting on the property ladder. There’s no perfect time, but sooner is better than later.
Good luck thinking you can afford to buy after graduating. Or ever. People these days can barely rent. Big up the incoherent gaggle of fashies in No. 10!
When you’re in your twenties you don’t necessarily know what you want from a living space to make the decision to buy a home, it might not suit you in 2-10 years.
I didn’t go to uni and went straight into work and in a year I moved out of my parents to a town near work (mostly for the freedom living away from parents). I rented two places over about 8 years before I was financially ready to buy somewhere and as soon as I could I ended up buying a flat in the city. I figured “at least I won’t be paying rent, get the city life for a few years and will have my own place to do up”. I don’t regret buying my flat but now I’ve turned 30 I sort of feel like I could have just rented a while longer and still had the deposit ready to buy something more substantial.
In the next 2-5 years I’ll end up buying a house so I can start a family and will probably be back in the town I was renting in the first place but have all the additional costs of selling/buying and those are not small numbers, especially stamp duty 😭.
But before i bought my flat I was single and only looking out for me. I now have a partner and we’re planning our life together (but the majority of costs for the next house will still be on me due to salary differences).
If I were you I’d rent for 2-4 years at least until you have more of a feel for what you want and where you want.
My 2p: stay with your parents for a few years and save and then buy asap. Right now interest rates are pretty high so if you’re graduating now or in the last 1-2 years, it makes sense to wait a bit
If you can afford to do it, then buy as soon as you can instead of wasting money on rent..
Hardly anyone young can buy a house. If they can they’re very lucky and it would be stupid not to.
I am 24 in Newcastle. I don’t know a single person who bought a house after uni except one ex boyfriend who had £32k in ‘savings’ (parents divorce money his mam gifted him) and one friend who’s mam bought her a flat.
There’s an angle a lot of people aren’t addressing that you really tie yourself down once you buy. I don’t know if I’d want to tie myself to one location in my early 20s considering the financial hit you take and the lack of flexibility… But it’s whatever your want to prioritize.
My penny’s worth: if you can afford to, and if the mortgage climate has calmed down enough, do it. Source: rented for over 10 years and the thought of how much money I paid to landlords makes me feel queasy. Could have been contributing to a house I actually owned (well, you know what I mean!)
It really depends on your circumstances though doesn’t it? And also to answer a later question – we did commuter belt. It makes it marginally more affordable I guess.