Published: Sat, February 17, 2018
Economy | By

Researchers have quashed the myth millennials don't want to own homes

Researchers have quashed the myth millennials don't want to own homes

But in 2015-16 nearly 90% of 25- to 34-year-olds faced average regional house prices of at least four times their income, compared with less than half twenty years earlier.

Middle income young adults born in the late 1980s are now no more likely than those lower down the pay scale to own their own home.

The falls in homeownership have been sharpest for young adults with middle incomes.

Home-ownership levels among those classed as earning "middle incomes" in particular have collapsed in the past two decades.

Over the past 20 years, average house prices have grown about seven times faster than the average incomes of young adults, according to the IFS study.

The amount of young homeowners has significantly decreased, with just one in four middle-income young adults owning their own home, down from two in three 20 years ago.

While homeownership has declined across all income brackets, the IFS said the most dramatic decline had been among young adults with middle incomes - people aged between 25 and 34 with after-tax incomes of between £22,200 and £30,600.

- This increase in house prices relative to family incomes fully explains the fall in homeownership for young adults.

However, after controlling for differences in observable characteristics of young adults such as their earnings and education, the homeownership gap between those from high and low socio-economic backgrounds is much smaller, at around 3 percentage points.

Chancellor Phillip Hammond attempted to offer a ray of hope to young buyers by introducing stamp duty cuts in the November budget.

Local newspapers accused the explosion in house prices of having "robbed" the younger generation of the ability to buy their homes.

John Healey, the shadow housing secretary, said the report was as a "wake-up call" for the Tories.

She said: "The dramatic shift in the housing market for first time buyers is brought to light with a shocking 38% drop over a 20 year period".

"Our research shows that first-time buyers can save up for a deposit five years faster by putting their money into property with a property ISA".

Figures published by the Office for National Statistics earlier this week revealed that house prices across the United Kingdom increased by 5.2 per cent in the year to December.

Dominic Raab, housing minister, announced a £45m investment on Friday into community projects aimed at helping the building of thousands of new homes.

The IFS study also comes as UK Finance figures showed that first-time buyer (FTB) numbers a year ago reached the highest number since 2006, with 365,000 people getting on to the property ladder.

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