Business

Strategy required to help millennials cut ties with family home

There are many reasons why young adults stay longer in the family home
Mark Graham

A RECENT news report shone a light on the so-called 'boomerang generation' – young people who still live with their parents. Over a third of 20-34-year-olds in Northern Ireland have yet to permanently move out, compared with around a quarter in GB.

There are a range of reasons why young people stay at home longer. Millennials probably settle down later, get a permanent job later and undoubtedly have a much tougher time affording their first home, but this doesn't really explain why young people here move out later. They actually face lower housing costs than they do in most parts of GB and the Republic.

My guess is that it is more to do with the fact that you can travel to work from most parts of Northern Ireland so you do not have to move out in a way you would do if you were moving to say London or Dublin.

The report told of young people who choose to live at home due the cost of continuing higher education and rising private rents costs in Belfast.

As an organisation that provides affordable homes to young people, we understand that they remain at home because they cannot access an affordable and secure home of their own and see little likelihood of ever being able to do so.

They are often living at home to try to save for a deposit. Saving £12,000 for a typical deposit on a low income whilst you are paying over £600 a month in rent is not realistic, particularly if you have a young family.

Over 36 per cent of people acquiring their home through Co-Ownership have children. According to the recent report from the Intergenerational Commission, millennials are half as likely to own their own home by the age of 30 as the baby boomer generation were at the same age.

They are also spending a record share of their income on housing, and are four times more likely to live in high-cost, insecure private rented accommodation as baby boomers were.

The cause of the problem is in part due to inter-generational inequality. Young people have suffered low pay growth since the financial crisis. Again, using figures from the Intergenerational Commission, average pay is still £15 a week lower in real terms in early 2018 compared with 2008.

But the problem is equally about the housing system. House prices have been rising at many times the rate of inflation since the 1990s, and are only affordable now due to very low interest rates. Even then, many people still need the help of the 'bank of mum and dad'. In addition, a vast amount of social housing was sold under right-to-buy and has never been replaced, meaning that only those in most desperate need have access to it.

Ironically, by some estimates, around half the homes sold under right-to-buy are in now in the private rented sector with a large proportion of those being funded by housing benefit. Providing homes this way costs the tax payer more in the longer term and provides a much poorer outcome for the tenant in terms of affordability and security.

Some suggest developing more social housing is the solution, whilst others point to increasing the levels of home ownership. Ultimately, people want affordable, quality homes; homes they can stay in for as long as want, a place to raise a family and be part of the community.

Social housing provides that, as does home ownership. The private rented sector, as is the case in many countries in Europe, can provide that with the right support and regulation.

We need a housing strategy in Northern Ireland that provides more homes and makes those homes affordable and secure regardless of tenure type.

:: Mark Graham is chief executive of Co-Ownership, Northern Ireland's provider of shared ownership housing.

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