[Puffer Fish]

Starter homes have gotten so expensive, many young professionals are opting out of trying to obtain homeownership instead of saving to buy a house.

(Which means they're probably just going to pay a higher price to rent a more decent and less small living space, rather than trying to save for the big purchase of a future home)

In the U.K., 42% of adults under 40 who do not own a home do not see themselves buying one in the next decade, according to a survey from Zoopla. 38% percent of those adults earn over £60,000 annually.

A somewhat similar situation is going on in the U.S., with many homeowners choosing not to sell their old houses since they got locked in at a low interest rate on their mortgage, and rates have since shot up.

'Guppies' are the latest real estate phenomenon: young people giving up on ever buying homes, Jordan Hart, Business Insider, Aug 2023

some related threads that might be of interest:
New York Times complains about lack of affordable "starter homes"
Millennial homeowners renovate instead of moving up
Housing affordability over time (19 July 2023 )
The rise of the professional class in big cities - and others getting pushed out (24 Dec 2021 in Economics)

[Puffer Fish]

from article, "The housing crisis is only going to get worse" :

Which group of British voters is most likely to support policies that undermine their own economic interests? Marxists will tell you it’s the working class. I want to propose a different answer: young progressives.

Consider the economic situation of a British graduate in her twenties, born outside of London to parents of modest means. In order to fully capitalise on the value of her degree, she will want to work in London: according to the Institute for Fiscal Studies, the growth of high-end industries since 1993 has occurred almost exclusively within the capital. Our young graduate is already contending with a difficult set of circumstances, with the tax burden set to reach a post-War high, and student loan repayments to meet. But the worst part of it is that record high property values in Greater London mean she will be spending more than half of her take-home pay just to rent a room in a flat share. And not a nice one, either.

Actually buying a flat in London -- let alone a family home -- now requires either an enormous cash injection from the bank of mum and dad, or a six figure salary. Our young graduate assumes that she will be renting forever, and she’s probably right about that. She may well delay starting a family because she feels that she cannot afford to. Eventually, she may well be forced to move out of London and take a lower paid job elsewhere, at a cost both to her own professional prospects, and also to the nation's tax revenue.

The role of progressive policy on immigration and social housing in worsening the economic situation

Figures released by the Office for National Statistics revealed net immigration figures of 672,000 for 2023, as well as its upward revision of 2022 figures to 745,000. In other words, last year Britain saw more immigration than from every year between 1945 and 2000 combined. Yet only around 233,000 new homes were supplied in 2021-22.

This would be enough of a problem on its own. But the plight of young would-be Londoners is made worse by a phenomenon that very few voters are aware of, since it has never been in the interests of either Labour or the Tories to advertise it, given that both parties are implicated in the disaster.

A very high proportion of housing units in Inner London boroughs are designated as social housing: 31 per cent overall, with Islington (39 per cent), Southwark (40 per cent), and Hackney (40 per cent) above that average. And the proportion of London social housing occupied by people born overseas is close to 50 per cent, up from 40 per cent ten years ago. Meanwhile, only 56 per cent of working age social housing residents in London are economically active.

This state of affairs is a consequence of post-1990s mass migration, and system of social housing allocation that does not distinguish between immigrants and natives, or indeed the employed and the unemployed. No major political party is proposing an end to either policy, and no mass movement of young Britons is demanding change. At least, not yet. ​

The housing crisis is only going to get worse , by Louise Perry, The Telegraph, November 25, 2023

[Negotiator]

Different country, same problem:

https://www.tagesschau.de/wirtschaft/ze ... i-100.html

She has held top positions in several major US banks for over two decades, including at the renowned Goldman Sachs, and since June she has been the most powerful female banker in Turkey: central bank chief Hafize Gaye Erkan.

Despite her prominent position, however, the 44-year-old is unable to find a suitable apartment on the overheated rental market in the Turkish metropolis of Istanbul: "We haven't found any accommodation in Istanbul. It's terribly expensive. We are staying with my parents," Erkan said in an interview with the newspaper "Hürriyet".

Translated with DeepL.com (free version)

[late]

There was a time, roughly 40 years ago when the interest rate on home loans was 12%.

You think this is bad??? Run the numbers for 12%.

We were locked out of buying a home for years. A Fed/state partnership gave first time buyers (like me) a 9% loan. That got me a tiny house in a bad neighborhood.

Change happens all the time, and a country needs to adapt. One of those adaptations is going to be fewer owning homes. There's lots of reasons, but that's the punch line.

[wat0n]

Interest rates were higher, but homes themselves were cheaper. It is actually better to buy a cheap home with an expensive mortgage than to buy an expensive home with a cheap mortgage.

[late]

Interest rates were higher, but homes themselves were cheaper. It is actually better to buy a cheap home with an expensive mortgage than to buy an expensive home with a cheap mortgage.

True, but even 9% was painful.

That's one of several reasons home ownership will decline. In the States, part of the reason why is income inequality.