Which factors make harder first home access? Which home is wanted by 'Y' and 'Z' generations?

02 | 01 | 24
| Real Estate

This 2024 we would like that each of our articles describes a reality and then solve a practical problem. We believe that our blog should help the reader of any condition, sex or age and, from time to time, surprise them by answering questions they are not used to asking themselves.

In this first publication of the year, as far as we can, we want to bring young people looking for housing closer to the landlords who can offer them a home.

Part 1: The perfect storm: low salaries, very high rents in relation to the costs, insufficient supply and high inflation

Housing availability is a pending issue for our sector and for the Public Administration, to whom Finques Feliu will always keep its hand outstretched

When the causes of housing inaccesability when are explained, too schematically, only two are mentioned:

  • The relatively low salaries in relation to rental prices.
  • The insufficient supply of housing 

These are necessary but not sufficient causes. There is a third, which makes the problem more serious: 

  • The sustained and high increase in prices: when these rise steadily, we have less money available to pay rent or mortgage

1.1 What is the magnitude of the housing problem? Let's look at two facts

In the second quarter of 2020, the Spnish Youth Council did a study according to which the youngest people had to spend 92.9% of their salary on rent. Was this trend linked only to the COVID-19 convulsion? 

No. In April 2023, when already a year ago that the pandemic was under control, according to Fotocasa and Infojobs study based on data of 2022, the salary dedicated by the general population, to satisfy the rent was 43% on average in Spain. In 2015 the percentage assigned to the rent was fifteen points lower

In this link you can access the great job of Fotocasa and Infojobs (in Spanish).

1.2 What proportion would have to suppose the payment of the rent with respect to the whole salary? 

Between 30 and 35%.

Do you see it impossible to reach this threshold? Click on this link from Housfy (in Spanish). In it, you will find: objective rules to calculate how much money you spend in the month and three simple formulas to establish precisely how much the rent payment has to represent.

1.3 Is mortgaging the solution to access to housing?  

If the cash purchase, which does not involve taking out a loan, is inaccessible for a young person with an average salary and the monthly rent also represents too high a proportion of the monthly expenses, is taking out a mortgage loan the solution?

It depends: it will be an excellent option if you (or you and your partner) have a job with a permanent contract and very well paid. On the other hand, it will not be so much if you earn little - and your salary will not be revised upwards in a short time - and, it will not be at all in case of being indebted before contracting the mortgage.

1.3.1 What is the relationship between: sustained price increases, rising interest rates and rising monthly mortgage payments? What will be the medium-term evolution of mortgage payments?

The relationship between the three economic magnitudes of the headline is direct:

1. The statistics institute detects a sustained increase in prices

2. In response, the central bank of the day raises interest rates - which regulate the percentage rate at which money is lent-

3. The monthly mortgage payment automatically rises (and raising rates makes any loan more expensive)

Until at least 2025 the European Central Bank plans to keep interest rates high, until then monthly mortgage payments will show an overall upward trend

Part Two What are the needs and expectations of young people when looking for housing?

2.1 The successful search for housing and the "Maslow Pyramid".

Finding housing makes it possible to build an autonomous life project in fullness. The 'Maslow Pyramid', which puts human needs into a hierarchy, helps to see this clearly:

1. 'Physiological needs' (breathing, feeding or resting) 2.

2. 'Safety needs' (physical integrity, prosperity at work and good health)

3. 'Love and belonging needs' (friendship, affection and intimacy)

4. 'Steem needs' (success, recognition, and respect).

5. 'Self-actualization needs' (goals or morale).

As you have seen, finding a home enhances level three, allows us to achieve level four and the peace of mind necessary to consider level five.

2.2 What characteristics do young people look for in their ideal home? 

a) It should be affordable in the short term and sustainable in the long term:

The main priority is to find a good price. To achieve this you have to carry out a good market research: So, once you have a clear budget to rent or buy, patiently dive into the portals to find the price range you are willing to pay.

b) That the property is flexible in negotiating the terms of the contract and allows pets:

Zygmunt Bauman in his book 'liquid life' describes, how there are no longer jobs for life. This is why young people prefer flexible landlords when negotiating rent.

On another note, dear landlord, in more and more tenant decisions, admitting pets plays a decisive role. It is good to know that homeowners' associations cannot prohibit the ownership of pets. However, we all have to make an effort to balance our rights with respect for the freedoms of others.    

c) That it is located near the center of work or the university: 

In Barcelona we have a transport network with insufficiencies yes, but with the systematization of an orthogonal grid in the buses (horizontal and vertical lines) connectivity has been improved. We can all congratulate ourselves on the success of decentralizing occupation and training centers.

d) That it is established in a place with a high expectation of safety:  

In much of the world this is the first concern .... Not the fourth. One must always aspire to improve, but in October 2022 the homicide rate in Catalonia was, according to Idescat, 0.5 per 100,000 inhabitants compared to 92 in Honduras -the Central American state is the first in this horrible ranking-. 

e) That it is located in a neighborhood with many services and green spaces

For example, in Sant Cugat, where we also have headquarters, as we explain in this link many neighborhoods meet these requirements. On the one hand, the shops cover many needs, on the other hand, the parks oxygenate us and allow us to walk our dog. 

f) Colivings: a minority but growing bet

These spaces are shared and are not claustrophobic. Do you want to know more about them? Click this link.

g) The dream of having a fully soundproofed basement:

Do you, as a homeowner, want your home to be different? In order not to disturb the community of owners leave in the hands of experts the total soundproofing of the basement where you live in this link we explain it. An apartment with the option of being able to rehearse music will make it really different.  As the German philosopher Nietzsche said: 'life without music would be a mistake'.

We wish with enthusiasm to have fulfilled the initial goal.