Conservative MP Nick Boles (pictured) said that the collapse in home ownership among young people is a ‘social and economic disaster’
Home ownership among young people has collapsed in the past 20 years, damning figures show today.
Sky-high prices and a housing shortage mean that only a quarter of middle earners aged between 25 and 34 now own property. In 1995, two thirds did.
Since the mid-1990s prices have grown seven times faster than incomes – denying millions the chance of a place of their own.
Campaigners and politicians demanded more house-building to tackle the crisis.
‘The collapse in home ownership among people in their twenties and thirties earning average incomes is a social and economic disaster,’ said Tory MP Nick Boles.
Robert Colvile of the Centre for Policy Studies said: ‘The fall in home ownership among young people – and increasingly those in their thirties and forties – has been one of the most dramatic, and damaging, shifts in our society and economy in recent decades.
‘If hard-working families cannot afford houses, how will they ever feel they have a genuine stake in society?’
The home ownership figures were drawn up by the Institute for Fiscal Studies. The think-tank said the value of a typical property rose by 152 per cent between 1995/96 and 2015/16.
Yet over that period incomes went up by only 22 per cent. The IFS said that middle-income young adults once had a similar chance of owning as those on high incomes but this had completely changed.
And 38 per cent of them now face trying to finance a property worth ten times their salary, compared with only 9 per cent in 1995/96.
Paula Higgins of the Homeowners Alliance campaign group said: ‘This is a complete disaster. We’ve got to think about the mounting implications for young people who can’t get a foothold and follow in the steps of their parents.
Damning new figures show that home ownership among young people has collapsed in the past 20 years, with politicians and campaigners calling on the government to solve tackle the issue
‘People rely on their homes as an asset – it’s a source of stability for families, and we’re creating a lost generation who can never get on the ladder.’
Ministers have tried to tackle the problem through the Help to Buy scheme, which gives first-time purchasers a state loan to help fund a deposit for a new-build.
But critics argue this has mainly served to boost the profits of developers – and their pay. Persimmon boss Jeff Fairburn was dubbed ‘Mr £131million’ for his huge shares bonanza.
Almost £1billion of Help to Buy subsidies have dramatically inflated his company’s share price.
Andrew Hood, an IFS economist who worked on the report, said: ‘Home ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes.
‘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 past two decades.’
Mr Boles suggested the crisis would hit the Tories’ electoral hopes.
‘Margaret Thatcher’s vision of a property-owning democracy is under threat,’ he said. ‘It will turn into a political disaster for the Conservative Party if the Government does not match its ambitious rhetoric with bold steps to increase house building.’
The British Election Study said the rise in turnout at the polls last year come from voters aged between 30 and 40 – those most likely to be frozen out of the property market.
To tackle the housing crisis, the Government has pledged to build 300,000 homes a year by the mid-2020s, although critics remain sceptical
Mr Colvile said the issue was one of supply: ‘We need to build many more homes, and to ensure that they go to the people who need them.
‘As it is, many parts of Britain are divided into two tribes – those who own property, and those who can never even dream of it.’
The Government has pledged to build 300,000 homes a year by the mid-2020s but there is widespread scepticism that it can hit this target.
As well as a lack of supply, the housing market has been inflated by the availability of borrowing at ultra-low interest rates.
The IFS report said 65 per cent of 25 to 34-year-olds on average incomes for their age were homeowners in 1995/96. But by 2015/16 that had fallen to 27 per cent.
It said 25 per cent of those born in the late 1980s owned their own home at the age of 27, compared with 33 per cent of those born in the early 1980s and 43 per cent of those born in the late 1970s.
Young adults from more advantaged backgrounds are significantly more likely to own, the IFS said.
Between 2014 and 2017, 30 per cent of 25 to 34-year-olds whose parents were in jobs classed as low-skilled, such as delivery drivers or sales assistants, had bought a property. This compared with 43 per cent of those whose parents were in higher-skilled occupations, such as lawyers or teachers.
Housing minister Dominic Raab MP said: ‘Through schemes like Help to Buy, we’re helping more people on to the housing ladder and last year saw the highest number of first-time buyers in the UK since 2006.
‘But we want to go further and faster, and our ambitious plan backed by targeted investment will help even more people by delivering the homes that Britain needs for young families, key workers and those on low and middle incomes.’
A report at the end of last year claimed that mass migration had helped price the young out of the housing market over the past decade.
The think-tank Migrationwatch said it had fuelled demand for rental properties which meant young people were ‘paying the price’ through higher rents. In turn, this had made it more difficult for them to save a deposit to get on the housing ladder.