Housing

Most young adults can’t afford to buy even the cheapest homes

The Institute of Fiscal Studies found that average house prices have risen by 173 per cent in the last two decades but wages haven’t kept pace with only a 19 per cent increase

A young person, seen from above, sits on the floor looking through a stack of bills in front of a laptop

Home ownership in the UK is plummeting, with young adults forced to turn to the private rental market, leaving them unable to save up for a deposit.

New figures released by the Institute of Fiscal Studies (IFS) today back this up.

In 1996 over 90 per cent of 25-34 year olds would have been able to purchase a house with a 10 per cent deposit by borrowing four and a half times their salary.

This has fallen to 60 per cent just 20 years later when applied to the cheapest homes in their area – in London it’s even worse with only one in three able to cobble together the funds.

And that is down to skyrocketing house prices with a 173 per cent increase since 1997. Wages have failed to keep pace – up just 19 per cent over the same period – pricing many out of home ownership and resulting in the proportion of home owners aged 25 to 34 falling from 55 to 35 per cent.

Outlays on deposits account for a higher percentage of wages as a result. Around half of young adults would have to save more than six months of their post-tax income to afford a deposit for one of their area’s cheapest homes compared to just one-in-ten in 1996.

For an average-priced home, that rises to more than 75 per cent of young adults, up from a third two decades ago.

The IFS insist the answer is in building more homes to meet increased demand as well as easing planning restrictions to free up areas to build in green belts and in London and the South East. The research comes ahead of their Green Budget which will be released on October 16.

“Big increases in house prices compared to incomes over the last two decades mean that it is increasingly difficult for young adults to get on the housing ladder, even if they do manage to save a 10 per cent deposit,” said Polly Simpson, a research economist at IFS and a co-author of the research.

“Many young adults cannot borrow enough to buy a cheap home in their area, let alone an average-priced one. These trends have increased inequality between older and younger generations, and within the younger generation too.”

The government has long spoken of the need to build more homes to tackle Britain’s housing crisis.

They have pledged to build 300,000 new homes every year by the mid-2020s while Theresa May promised a £2bn fund to build more than 40,000 affordable homes last month following the release of the social housing green paper.

Support the Big Issue

For over 30 years, the Big Issue has been committed to ending poverty in the UK. In 2024, our work is needed more than ever. Find out how you can support the Big Issue today.
Vendor martin Hawes

Recommended for you

View all
Beat the Streets music festival funds new homes for rough sleepers: 'If we could do more, we would'
Homelessness

Beat the Streets music festival funds new homes for rough sleepers: 'If we could do more, we would'

Rents in UK are rising at highest rate in decades. Will they keep going up?
rents uk
Renting

Rents in UK are rising at highest rate in decades. Will they keep going up?

Scotland needs real-time rough sleeping count to save lives
rough sleeping and temporary accommodation in Scotland is under the spotlight on Buchanan Street in Glasgow
homelessness

Scotland needs real-time rough sleeping count to save lives

'More bad news for renters': Rental crisis continues with steep rent rises despite inflation falling
inflation is falling but rents are still rising at a faster rate than wages
RENTING

'More bad news for renters': Rental crisis continues with steep rent rises despite inflation falling

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know