There has been increasing difficulty for young adults in Britain to secure a place on the property ladder, causing many to be “locked out of the housing market”.
Recent studies from the Institute for Fiscal Studies (IFS) has found in the last 20 years, middle income 25 to 34 year olds have seen the biggest decline in home ownership. Figures have shown a drop from 65 percent to just 27 percent in 2016.
With the average cost of a deposit ranging from £22,200 to £30,600, numerous middle-income earners at this age are struggling to find value for their money.
Government data has found many have turned to the alternative private rented sector which has doubled in size since 2004, with nearly half of all 25 to 34 year olds in England paying private landlords for their accommodation.
For nearly 90 percent of 25 to 34 year olds, average house prices are more than four times their annual income after tax deductions, with 40 percent of housing in popular areas such as London seeing prices more than 10 times their income. This has resulted in home ownership falling at least 10 percent in every region across Britain, with the South East seeing the biggest decrease.
The Government introduced the Help to Buy scheme in 2013 to increase access to financial support for first-time buyers unable to pay large deposits, and scrapped their stamp duty in November’s Budget, but this has not been enough. Government Ministers recently admitted England’s housing market was “broken” with home ownership, a distant dream for millions.
John Healey, Labourís shadow housing secretary, said: “This research should be a wake-up call for Conservative ministers.
After almost eight years of failure on housing, the government is still failing to tackle the fundamental problems of the housing market”.
Although the minimum National Living Wage has been increasing for the past few years, forecasting to reach £7.83 in April 2018 for over 25’s, property prices have grown seven times faster than the average incomes of younger adults, with all other aspects in the cost of living such as transport and utility bills also soaring. IFS’s study found house prices were 152 percent higher in 2015-16 than they were 20 years earlier after adjusting for inflation, while real net family incomes for those aged 25-34 had increased by only 22 percent over the same period. This suggests that even those graduating from university with the average salary of £23,000 may have to wait years before they can afford to own their own house.
Changes are continuously trying to be made however, with financial support of £8.9 million being injected into projects in Northern England to encourage the construction of more than 2,000 homes.
A study by the Local Government Association last week also found 423,500 homes across England and Wales are currently waiting to be built despite having been granted planning permission. The Government says it is currently working to identify how the building process can be speeded up. After they know this, they can begin to start fixing this collapsing market.