Young people will be unable to afford housing by 2020
Children born in the 1980s and 1990s will no longer be able to afford to buy a home or pay rent by 2020, according to shocking new research.
House prices are expected to soar by 42% between now and 2020, while rents will rise by 46%, the National Housing Federation (NHF) has warned.
It said huge numbers of young people will remain trapped in their parents' homes as they become priced out of the market. The NHF said 3.7 million people will be living with their parents by 2020 as a result of a lack of new homes being built at the same time as the population is rising. Wage growth will also fail to keep pace with rises in house prices and rents.
The report states: "By 2020 the price of a first-time buyer's home will increase by 42% to £245,165. Although wages for 22- to 29-year-olds will increase by 36% by 2020, this poses a huge challenge for those wishing to be homeowners.
"Low-earning young people would have to spend 16 times their average wage just to buy a home."
Rising house prices has the effect of forcing people into the private rental market, which in turn pushes up rents.
"High rents make it very difficult for young people to save for a mortgage deposit – the amounts of which will continue rising because house prices are going up," the report continues.
The research shows that private rents will remain relatively flat this year, but could rise by 6% a year between 2015 and 2016, leaving rents 46% higher than they are today. "When the new flood of young adults born in the noughties starts university or a new job, they could push rents even higher in a country already chronically short of decent housing," the report states.
According to a new report by housing charity Shelter the UK needs 250,000 homes to be built a year to meet the country's housing needs, but we are currently delivering half that amount.