Young homeownership levels plummet
It has long been known that the number of younger people who own their own home has plunged in recent years due to higher house prices. The latest data has shown just how large this fall has been.
A study by the Institute for Fiscal Studies (IFS) has found that whereas 65 per cent of those aged 25-34 whose incomes were in the middle 20 per cent for their age group owned their own home in 1995-96, the figure was only 27 per cent in 2015-16.
This group have after-tax incomes of between £22,200 and £30,600 per year and while a third of this 'middle-income' group are university graduates and thus have student debts to contend with, 30 per cent left school at 16. A quarter are not married or in a cohabiting relationship, while 40 per cent do not have dependent children.
Among those born in the late 1980s, only 25 per cent owned a home by the age of 27, compared with 33 per cent for those born in the first half of the 1980s and 43 per cent for those born in the late 1970s.
Report author Andrew Hood, a senior research economist at the IFS, said: "Homeownership among young adults has collapsed over the past twenty years, particularly for those on middle incomes; for that group, their chances of owning their own home have 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.”
All this confirms that the rental sector is an increasing factor in the lives of young people, either as a supplier of housing until they save up enough to buy a home, or as a permanent solution.
Indeed, while the government has been working hard to boost the supply of new homes, the affordability remains well below what it was even a decade ago. With incomes still lagging behind even Consumer Prices inflation, the private rental sector is sure to have a major role to play in housing young people for many years to come.