Generation Z may not need mortgages, here’s why

• The idea of getting a mortgage with just their own income is often unthinkable, and those who do own property often have an uncommonly early inheritance to thank.
• While housing crises rage across Europe, many members of Generation Z – those born after the year 2000 – may soon find that the shoe is on the other foot.
• Generation Z therefore stands to benefit from Europe’s declining birth rate, one of the lowest in the world at 1.53 children per woman.

Mortgages: an increasingly unattractive prospect

• If you meet these criteria, you are then locked into, on average, a 25-year commitment.
• The prospect of getting one is especially unappealing at a time when rising mortgage rates are driving the cost of living up in Europe and beyond.

Home ownership in Europe today

• The average mortgage duration is 25 years, meaning payments are typically completed by the age of 59, just before retirement age (65 in most EU member states).
• This does vary widely across the continent, and there is little correlation between ownership rates and the number of active mortgages.
• In contrast, this percentage is far lower in countries like Italy, where only 14.6% of homeowners have a mortgage.

Spain: a case in point

• It is above average in life expectancy and rates of home ownership (especially among older generations): the average Spaniard first purchases property at age 41, and receives an inheritance at 51.
• From 2021 to 2022 the number of homes inherited in Spain rose by 3.7%, with over 17,800 homes inherited per month within its borders.

Leaving the family home

• However, the value of inheritances varies widely across different countries and wealth distributions, and it is difficult to make predictions for all of Europe.
• There is also huge variation in factors such as the age of leaving the family home.
• In Finland, on the other hand, people typically leave home at age 21.4, with similarly low figures across Scandinavia.
• Spain’s staggering drop of 62.54% in new mortgages from 2007 to 2023 is reflected in data from across Europe.

Impacts on Generation Z

• Though they will face plenty of other problems, such as securing stable employment contracts, housing might not be the primary concern for much of Generation Z in the future.
• This will benefit Millennials to a certain extent, but with fewer siblings, many wealthier members of Generation Z might not need to divide inheritances from parents who often own multiple properties.

Geoffrey Ditta no recibe salario, ni ejerce labores de consultoría, ni posee acciones, ni recibe financiación de ninguna compañía u organización que pueda obtener beneficio de este artículo, y ha declarado carecer de vínculos relevantes más allá del cargo académico citado.