Rising rents and property prices stop consumers saving

Rising property prices and higher rents are making it increasingly difficult for young people to save money, a new survey shows.

The Nationwide UK (Ireland) Savings Index, which measures consumer sentiment towards saving, fell to its lowest level in almost two years last month. The index dropped to 103 points in June, its lowest reading since October 2014 and down 16 points versus May.

The decline was led by younger savers, with many claiming they couldn’t save sufficient sums due to rising home and rental prices.

The Savings Attitude sub-index, one of two sub-indices that make up the main index, declined by 27 index points to 103. Almost a third of survey respondents aged under 50, said they could save “nowhere near enough,” the highest reading since December 2013.

There was also an increase in the numbers of respondents aged over 50 who reported difficulties with saving.

Overall, the proportion of consumers who said they saved regularly dropped to 39.1 per cent in June from 43.3 per cent in May.

"The impact of higher property prices, both in terms of renting and buying, falls more upon those in the under 50 age group as they tend to be more likely to be trying to get on the property ladder, trading up or indeed renting. It's therefore not surprising that we've seen a spike in the under 50s who feel they can save nowhere near enough," said Brendan Synnott, managing director, Nationwide UK (Ireland).

The savings environment sub-index, which asks if people believe that now is a good time to save, declined from 108 points to 102 points last month, its lowest reading since August 2015.