Homeownership among millennials plummets

16 February 2018

Millennials are struggling to get onto the housing ladder and are much less likely to become homeowners than their counterparts two decades ago.

According to research from the Institute for Fiscal Studies (IFS), 20 years ago two in three (65%) middle-income young people owned property. By 2015-16, this had dropped to just one in four (27%).

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. But this is little comfort when looking at the way in which housing valuations have changed in the past 20 years. Two decades ago, less than half of young adults lived in a region where house prices were more than four times average income. Today 90% live in such an area.

This significant rise in house prices compared to incomes explains why so many young people now struggle to get on the housing ladder, says the IFS. Young peoples’ incomes are now much lower relative to average house prices.

Source: Insitute for Fiscal Studies, February 2018. 

Andrew Hood, a senior research economist at the IFS and an author of the report, comments: “Homeownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes – for that group, their chances of owning their own home has fallen from two in three in the mid-1990s to just one in four today. The reason for this is that house prices have risen around seven times faster in real terms than the incomes of young adults over the last two decades.”

Moneywise has reported variously on this issue. In August 2017 a Halifax study found that nearly half of 18-35 year olds waited until they had a partner to buy a house. Older millennials have been dubbed “generation debt”, struggling to meaningfully save for housing or retirement.

However, it is not all doom and gloom, as research from insurer Zurich found that the struggle to afford a mortgage has made millennials the most savvy switchers in the market.

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