Sanctus – A compounding crisis of soaring rents and increasing daily living expenses is locking out an entire generation from home ownership, according to a new report from the Central Bank of Sanctaria. The latest model from the leading financial institution now estimates the average down-payment required to secure a first home in Sanctus has risen to S£98,500, significantly up from the S£73,000 previously reported by the body in 2016.
Renting in the nation’s capital is no walk in the park either, with monthly rents for a standard 1-bedroom apartment now peaking at S£5,600 per month. Combined with your typical oat latte macchiato now costing S£10.00 too, the report suggests that the 18-35 year-old demographic may never earn enough to buy property at all. Economists at the Bank suggest that the core of the issue lies in a widening disparity between wage growth and localised inflation. While corporate profits are at record highs, entry-level professional salaries in Sanctus have largely stagnated when adjusted for inflation – a young professional on S£115,000 (a competitive starting salary in the city) is left with virtually zero disposable income to save towards that critical down-payment.
This generational setback has wider repercussions. With young people unable to participate in the domestic housing market, the capital’s residential real estate portfolio is becoming increasingly concentrated in the hands of “professional” or corporate landlords and investment funds who, driven by profit, are hiking rents on an annual, or even more frequent basis, compounding the problem. With the demographic restricted in their discretionary spending, the retail, hospitality, and domestic tourism industries will inevitably suffer. Further, the report notes, without being able to get on to the property ladder and therefore delaying meaningful household formations, a sharp decline in birth rates is on the horizon.
In response, Secretary for Infrastructure Amanda Thomas has said the federal government has been easing the tax burden on state governments to enable them to invest more in local housing initiatives. Thomas also pointed to tax breaks for first-time buyers, including a reduced stamp duty of 1% on a first-time home purchase. In particular, she said, Sanctus has the added problem of running out of zonable land within its state boundaries to support new build housing. “We are not just focusing on enabling people to buy homes in urban centers, we’re improving public transport options to allow people to purchase homes in suburban or satellite areas and commute [in] ease to their employment opportunities deep in city centers”.
Despite the federal government’s comments, the report is clear: without immediate policy intervention, Sanctus in particular risks becoming an irreversible hub of corporate wealth supported entirely by permanent class of asset-poor renters.
NATHAN MAY, Financial Correspondent
