Rising rents mean that young people are less mobile than they were 20 years ago and are not moving to higher paying parts of the country, new research shows.
Young people are now far less likely to move to big cities such as London where they can earn more money due to soaring rents, according to think tank the Resolution Foundation.
Its research found that the number of young people aged 25 to 34 starting a new job and moving home in the last year has fallen by 40% in the last 20 years.
The report says that the main reason for falling job and home mobility is that the financial incentives for moving are far lower.
Young private renters’ propensity to move areas for work has fallen by two-thirds over the past 20 years.
Once housing costs are deducted, the average private renter moving from a low-paying area such as East Devon to a mid-paying area such as Bristol would have seen a financial gain of 16% in 1997, compared to just 1% last year.
Similarly, moving from a low-paying area straight to a high-paying area such as Croydon would have seen a financial gain of 26% in 1997, compared to minus 3% last year.
One of the reasons for this is that rising rents costs are removing any financial gains made even though salaries in big cities tend to be higher on average.
Private rents have risen fastest in higher-paying areas of the country – going up by almost 90% in the highest paying local authority areas, compared to just over 70% among the lowest paying.
This has significantly reduced the living standards uplift from moving for work once housing costs are factored into the equation.
However, the report notes that there are a range of non-financial reasons for falling job and home mobility, such as people preferring to stay close to their parents and local networks.
Increasing house price gaps between places is also making it harder for older home owners to move without having to downsize to a significantly smaller property.
The think tank warns that with pay rises three times for those who move, this fall in job mobility could end up stunting young people’s pay and career prospects.
Lindsay Judge, senior policy analyst at the Resolution Foundation, says: “Young people today are often stereotyped as being footloose when it comes to work. But in fact they are moving around for new job opportunities far less frequently than they used to.
“A key reason why people move around for work is the lure of a bigger salary. But increasingly those pay gains are being swallowed up by high housing costs.
“Of course there are many good reasons why people don’t want to move around for work, from better job opportunities closer to home, to wanting to stay closer to friends and family.
“But for young people in particular, there are real advantages to moving when it comes to trying new roles and developing skills – and housing should not be a barrier that prevents them doing this.”