Majority of Millennials Plan to Buy a Home in the Next Few Years

Over 80 percent of millennials in the United States who do not already own a home, plan to buy a home within the next five years, according to a recent HSBC Group research.

HSBC Group’s Beyond the Bricks, which is an independent consumer research survey of 9,000 in nine countries across the world, including 1,009 respondents within the United States, found that the dream of owning a home is very much still front and center for millennials around the world.

Millennials, who have credited slow wage growth and housing price inflation as obstacles in purchasing a home in the past, still see the goal of owning a home as an important personal aim.

The HSBC report also revealed that millennials have a need for better financial planning.  Among non-owners intending to buy a home in the next two years, 32 percent have no overall budget and 54 percent have only set an approximate budget.  More than half of millennials who bought a home within the last two years said they wound up spending beyond their initial budget. 

David Gates, U.S. Head of Mortgage Origination and Sales for HSBC, says, “This study highlights that young people strongly value homeownership, yet there are significant challenges to making the dream a reality for millennials around the world.  The perfect storm of stagnating salaries and rising house prices, paired with the need for improved financial planning can make buying a home a deferred reality.”

Close to three-quarters (71 percent) of millennials are saving more money for a deposit and waiting to earn a higher salary before purchasing a property, the report finds.

Millennials face some challenges when it comes to housing affordability, with a projected 1.9 percent increase in salary growth expected for 2017 and average property prices rising by 4.8 percent last year.

HSBC research pointed out four actions that millennials can take to help them in accomplishing their goal of owning a home:

·      Please early and consider the importance of having a deposit

·      Include extra costs beyond the purchase price within your budget

·      Consider sacrifices, such as spending less on leisure and going out, to help save more money and at a faster pace

·      Look at the big picture of your finances and shop for a home loan that best serves your needs.