Northwest-based millennials’ home ownership levels better than any other UK region outside London.
23 January 2017
London most reliant on Bank of Mum & Dad to get keys to their first homeMore Northwest -based millennials already own their own home than the national average. According to the study of more than 1,000 millennials aged 23-36, 40% of Northwesterners own their own place, as against 36% nationally, by the age of 36.
Four of every five (81%) Northwest millennials stated that they are ‘savers’, significantly higher than their regional neighbours in Yorkshire and Humberside, 67% of whom stated that they do any saving at all.
The average saved per month by the Northwest’s millennial savers surveyed was £159.68 per month, significantly higher than the Yorkshire and Humber region’s millennial savers who reported banking just £133.44 per month. Londoners however came top of the savers’ chart regions of the UK, with an average of £208.52 saved per month.
The nationwide study of 1,000 millennials aged 23-36 was conducted by Opinium for financial technology firm Dunstan Thomas.
The prospects for home ownership are also positive in the Northwest: four in every five (78%) young people living in the region, who plan to own but don’t currently, expect to own their own place by the age of 40, whereas the national average expectation finds 77% in their own home by the same age. However all millennials may well be over-optimistic as the Institute of Fiscal Studies’ actual home ownership numbers suggest that there are in reality little more than 40% of the UK population owning their own place by the age of 40 today.
Millennials surveyed in the neighbouring region of Yorkshire and Humber revealed significantly lower levels of home ownership than the Northwest - only 26% having achieved the goal of owning their own property compared to 40% in the Northwest.
Despite the frequent depiction of millennials being overly-reliant on their parents for financial assistance, results from the Dunstan Thomas-backed poll revealed that 57% of the funding for the Northwest’s millennial generation first time buyer’s deposits come from their own pockets which is one of the highest in the UK. Correspondingly, millennials based in the Northwest are one of the least reliant on the Bank of Mum and Dad – getting under a sixth (15.66%) of the deposit for their first home from parent’s or partner’s parents’ savings and inheritances, the third lowest dependency-level in the country.
By contrast millennials buying in London depend on the Bank of Mum & Dad for nearly a third of the deposit on their first place (30.23%) and those living in the Southeast are not far behind - depending on parent’s and partner’s parents’ savings and inheritances for 28.39% of first home deposits. That said, nearly half (49%) of London-based millennials have already achieved their goal of home ownership, perhaps as a result of sharing the load between the generations a little more.
The survey launched by market researcher Opinium was initially designed to garner an understanding of millennials’ attitudes towards the Lifetime ISA (LISA), a new savings product that was designed by the government to help young people under the age of 40 to save for a deposit on their first home. The LISA will launch in less than three months’ time on the 6th April 2017.
Almost half of millennials (47%) in the Northwest had never heard of the LISA, or had heard the term but had little awareness of what it was. Even less awareness of this product was found in neighbouring Yorkshire and Humberside, where 62% of the millennials surveyed had little or no understanding of what the product was, indicating the need for improved education and understanding of this product.
In addition to this, the research showed that there appears to be a lack of sufficient knowledge amongst millennials about the merits of the LISA as a retirement savings product, in comparison to auto-enrollment pensions. Almost one in five (18%) of the respondents from the Northwest ‘did not know’ whether taking out a LISA or being enrolled in a pension scheme would be their preferred method of saving for retirement.
Adrian Boulding, Director of Retirement Strategy at Dunstan Thomas, explained: “Our Millennials Study shows that there is clear danger of the millennial generation in the Northwest - as elsewhere - buying the LISA for the wrong reasons. To those of us in the industry it might look like a highly flexible savings vehicle geared to a key financial goal i.e. getting on the housing ladder whilst you are still young. But our findings indicate awareness of the product amongst the target audience is low and they may well decide they want to dip into their LISA to fund a period between jobs or even a big holiday, only to find they are being penalised for trying to use the product flexibly.
“Worse, they could see the LISA as their way to save for retirement and consequently opt out of their workplace Auto-Enrolment pension scheme which is, in the main, a much better way to save for retirement than a LISA because pensions enjoy matching employer contributions.”
The Dunstan Thomas survey also probes preferred capabilities and functionality that millennials would most like to see in new smart phone-ready, highly interactive apps which Dunstan Thomas is developing for product providers. The next generation of customer engagement tools will help consumers make better financial choices engendering healthier saving habits, while enabling providers to understand and engage more deeply with their customer-base.