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Millennials are optimistic about the prospect of owning their first home within the next five years, but a poor grip on finances coupled with a hostile economic landscape means that, for many, the reality still remains a long way off, according to a new HSBC study.
The problem is most pronounced in the U.K. and Canada, where dramatic house price growth has priced many millennials out of the market.
Last year, house prices grew at an average rate of 7.5 percent in the U.K. and 7.4 percent in Canada. This compares to a 4.8 percent increase in the U.S. and a 0.6 percent rise in France.
In HSBC's study of 9,000 millennials – those aged approximately 18 to 35 – across nine major developed economies, it found that 40 percent already own their own home, and of those who do not, 83 percent intend to buy within the next five years.
This is good news for a generation often thought to have been priced out of the housing market by increasing prices, poor wage growth and changing demographics. But it also points to the unrealistic expectations of millennials vying to get a foot on the property ladder, says HSBC.
Of those intending to buy within the coming years, 69 percent say they have not yet saved enough for a deposit and 31 percent have no overall budget in mind.
Meanwhile, 34 percent of would-be purchasers are held back because they cannot afford the type of property they would like, despite a general willingness to cut back on leisure spending and other longer-term goals.
Room to grow
Almost two-thirds (64 percent) of millennials who are yet to buy say they are holding out for a salary increase in order to do so.
However, the latest statistics from Korn Ferry Hay Group forecast average salary growth of less than 2 percent in the year ahead. The U.S. and U.K. can expect growth of 1.9 percent, whilst Canada lags behind at 0.9 percent.
In contrast, prospects for millennial homeownership look highest in China and Malaysia, where wage growth is expected to be approximately 4 percent in the coming year. This sits well against relatively lower house price growth of 3.2 to 3.6 percent last year.
"With four in ten already owning their home, the dream of home ownership for millennials is definitely alive and kicking," Louisa Cheang, HSBC's global head of retail banking, said.
"The greatest challenges are in those countries where there is a perfect storm of stagnating salaries and rising house prices – for millennials in those countries, the dream, while not dead, looks set to be deferred."