Апреля 24, 2018

Home ownership among young adults has 'collapsed'

17 Февраля 2018, 12:54 | Gordon Grant

One in four middle-earning young adults own their own home – down from two in three 20 years ago, claims report

Homeownership amongst millennials plummets

The research found that over the twenty year period, the share of this demographic who own their own home has shifted closer to the percentage for the lower income group (8%), than that recorded for the higher income group (64%).

For 90 per cent of millennials, average house prices are more than quadruple their average after-tax income, while for 40 per cent, prices are more than 10 times their income.

Over the past 20 years, average house prices have grown aroundseven times faster than the average incomes of young adults.

The chance of owning a home for young adults in the United Kingdom has more than halved in the last 20 years, according to the Institute of Financial Studies (IFS).

The plunge in homeownership is primarily due to a rapid rise in property prices relative to incomes, the IFS said, making buying a home more inaccessible to young adults than it was in the past.

One in four middle-earning young adults own their own home – down from two in three 20 years ago, claims report
Young middle-earners fall down the property ladder

Meanwhile, young adults from wealthy backgrounds were increasingly likely to own a property, compared to those from less privileged families.

The IFS found that on average "middle-income" young people aged between 25 and 34 had between £22,000 and £36,000 to spend each year after taxes.

For almost 90% of 25 to 34 year olds, average house prices in their region are more than four times their annual after-tax family income; for almost 40% house prices are more than 10 times their income.

The government abolished stamp duty for the majority of first-time buyers but was widely criticised after the independent Office for Budget Responsibility warned it would push up house prices, benefiting those who already owned homes.

"Our conclusion is simply that increases in house prices relative to incomes of young adults can fully explain what's happened", said Andrew Hood, senior research economist at the IFS and one of the authors of the report.

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"With the average deposit for first-time buyers in the United Kingdom at £33,000, and an average wait of eight to 10 years to reach it, it's clear that much more needs to be done to help people on their journey".

"But we want to go further and faster and our ambitious plan backed by targeted investment will help even more people by delivering the homes Britain needs for young families, key workers and those on low and middle incomes", he added.

John Healey, Labour's shadow housing secretary, said the research should be a "wake up call" for the ministers.

The Government introduced the Help to Buy scheme in 2013 to bolster access to financial support for first-time buyers unable to pay large deposits, and scrapped stamp duty for nearly all first-time buyers in November's Budget.

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