Homeownership among young Brits plunging amid house price surge

Ann Santiago
February 17, 2018

The level of homeownership among young adults has "collapsed" over the past 20 years, with the sharpest decline felt among people on middle incomes, a think tank said yesterday. "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.

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.

By contrast, the real net family incomes of those aged 25-34 grew by only 22 per cent over the same twenty years.

The average United Kingdom house price was 152% higher in 2015/2016 as in 1995/1996 after adjusting for inflation, but the average after tax family income of 25 to 34 year olds grew by only 22% in real terms over those 20 years.

Over the same period of time, average house prices have grown approximately seven times faster than the average income for young adults, with the former growing 152% and the latter growing 22% since 1995 when accounting for inflation.

That followed the Help to Buy scheme introduced in 2013, which widened access to mortgage finance for first-time buyers unable to pay large deposits.

She added: "This has combined with an increase in stamp duty that means people are moving less frequently than they used to. But with the recent shifts in buy-to-let taxation, supply could open up".

Recent research has revealed that homeownership among middle earners has more than halved over the last two decades. For young adults on average incomes, the new landscape looks a little bleak.

Rocketing house prices and stagnant wage growth have caused home-ownership in young adults to "collapse", according to a report from the Institute for Fiscal Studies.

The chancellor, Philip Hammond, placed helping young buyers to get on the property ladder at the heart of the November budget.

Young adults from more advantaged backgrounds are significantly more likely to own their own home, the IFS said. But we also need more forward-thinking, innovative policies to address the challenges of affordability and space in the UK's cities. The founder of the Young Money Blog stated: "It is really hard to see how we can make this better when we are still seeing a huge demand for housing and that housing demand is not being met with the right number of houses".

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