Wednesday, 26 September, 2018

Young people in United Kingdom experience decline in homeownership

CHINA-LIFESTYLE-CELEBRITY-RETAIL-INTERNET Millennials may like to travel but that doesn't mean they don't want to own homes
Nellie Chapman | 17 February, 2018, 23:52

But in 2015-16 nearly 90% of 25- to 34-year-olds faced average regional house prices of at least four times their income, compared with less than half twenty years earlier.

"Home ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes", said Andrew Hood, a senior research economist at the IFS.

"Given what we find about the relationship between house prices and home ownership, you might expect the decline in home ownership to start flattening off", he said.

Adjusted for inflation, the average United Kingdom house price in 2016-17 was 152% higher than in 1995-96, compared with a 22% rise in real incomes. Between 2014 and 2017, 43% of 25- to 34-year-olds whose parents were in higher-skilled jobs owned their own home, compared to 30% of those whose parents worked in lower-skilled jobs.

Two decades ago, less than half of young adults faced house prices of more than four times their income, and less than 10% faced house prices of more than 10 times their income.

While homeownership among middle-income young adults has declined across Britain, it fell most sharply in the southeast, the figures showed.

House prices have increased seven times faster in real terms than the average annual salary of a young worker.

Only a quarter of young people with middle incomes now own a home in the United Kingdom, down from two thirds 20 years ago, a new report reveals.

- The key reason for the decline is the sharp rise in house prices relative to incomes.

Stagnant wage growth and rocketing house prices have caused home-ownership in adults to "collapse", according to a report from the Institute for Fiscal Studies. The study showed a third of those affected are university graduates, while 30% left school at 16.

Wage growth failing to keep pace with house prices is being blamed for a "collapse" in home-ownership levels among young adults.

It means that the home ownership rate of middle income young adults is now closer to those with low incomes than those with high incomes.

John Healey, the shadow housing secretary, said the report was as a "wake-up call" for the Tories. By 2015/2016, just 27% of that group owned their own home. "After nearly eight years of failure on housing, the government is still failing to tackle the fundamental problems with our broken housing market", he said.

Harle points out that in 1995 first-time buyers could access 95 per cent or 100 per cent mortgages.

Dominic Raab, housing minister, announced a £45m investment on Friday into community projects aimed at helping the building of thousands of new homes.

"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".