A rapid rise in house prices has resulted in the ‘collapse’ of home ownership among those aged 25-34, according to research from the Institute for Fiscal Studies.
What’s the latest?
Just 27% of 25 to 34-year-olds currently own a house, the Institute for Fiscal Studies (IFS) has found.
It's a dramatic drop since 1995-96 when 65% of young middle-income (£22,200-£30,600 annually) earners were on the property ladder.
Why is this happening?
The ‘collapse’ of home ownership among young adults was blamed on the spike in house prices.
Around 90% of 25 to 34-year-olds face average regional house prices of at least four times their income, with 40% finding property is now worth more than 10 times their annual salary.
Chancellor Philip Hammond pinpointed increasing house prices for young people as an area of concern in his 2017 Autumn Budget.
Growth in real house prices and in net incomes of those aged 25-34:
Who does it affect?
Of those born in the late 1980s, just 25% were homeowners at the age of 27, compared to 33% of those born five years previously, and 43% of those born in the late 1970s.
Home ownership for young adults has fallen in every British region, but is most severe in the south east, with the average house in 2015-16 costing 15.7 times more than the annual income of young adults in London.
Those with wealthy parents are significantly more likely to own their own home.
Data from the past three years found 43% of those aged 25-34 whose parents were in higher skilled jobs – including lawyers and teachers – were homeowners. This compares to just 30% of those whose parents are in low-skilled employment.
Top 3 takeaways
- Just 1-in-4 middle-income young adults own their own home
- House prices have risen about seven times faster than the average incomes of young adults over the past 20 years
- The average UK house price was 152% higher in 2015-16 than in 1995-96
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