Home ownership among young people 'collapsed', IFS research reveals

Average house prices grew seven times faster than incomes of young adults over last two decades

Those born in the late 1980s are much less likely to be homeowners in their late twenties than their immediate predecessors
Those born in the late 1980s are much less likely to be homeowners in their late twenties than their immediate predecessors

The true extent to which home ownership among young people has plummeted has been laid bare by new research.

Just 27 per cent of middle-income adults aged between 25 and 34 owned a home in 2016, down from 65 per cent among the same age group in the mid-Nineties, the Institute for Fiscal Studies has found.

The independent think tank looked at young adults in the middle 20 per cent of households in terms of earnings – those with an after-tax income of between £22,200 and £30,600 per year.

It found that those born in the late 1980s were much less likely to be homeowners in their late twenties than their immediate predecessors. A quarter of people born in the late 1980s owned their own home by the age of 27, compared to 33 per cent of those born five years earlier and 43 per cent of those born in the late 1970s.

Andrew Hood, senior research economist at the IFS, said: “Home ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes.”

Home ownership for young adults has fallen in every region and nation, and has decreased the most in the South-east, the IFS said. The proportion of 25 to 34 year olds who own their own home dropped from 64 per cent to 32 per cent in the South-east and by more than 10 percentage points in every other region and nation of Britain.

The fall in home ownership is entirely explained by the fact that young adults’ incomes are now much lower relative to house prices on average, the report concluded.

Over the past 20 years, average house prices have grown around seven times faster than the average incomes of young adults, the IFS said.

The average UK house price was more than two and a half times as high in 2015-16 as in 1995-96 after adjusting for inflation, but the average after-tax family income of 25 to 34 year olds grew by only 22 per cent in real terms over those 20 years, the research found.

For nearly nine in 10 adults aged 25 to 34 year olds, average house prices in their region are more than four times their annual after-tax family income and for nearly 40 per cent house prices are more than 10 times their income.

Twenty years ago, less than half of young adults faced house prices of more than four times their income, and less than 10 per cent faced house prices of more than 10 times their income.

Young adults from more advantaged backgrounds are significantly more likely to own their own home. Between 2014 and 2017, 30 per cent of 25 to 34 year olds whose parents were in low-skilled occupations owned their own home, compared to 43 per cent of those whose parents were in higher-skilled occupations.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in