W
ith only one in 10 young people likely to be on the property ladder in 2025, home ownership is increasingly becoming the preserve of older and wealthier households, says think-tank the Resolution Foundation.
According to its new report on living standards, the housing ladder is rapidly disappearing for most young working households on modest incomes, with the over-45s now accounting for three-quarters of all home owners.
Modest income working households under-35 recorded especially sharp declines, with homeownership plummeting from 57% in 1998 to just 25% today. In contrast, levels of private renting have more than doubled, from 22% to 53%. The biggest decline was for young families on modest incomes.
The analysis shows that those aged over 65 now account for around one-third of all homeowners, up from less than one-quarter in 1998 – an increase of 43%. Those aged 16 to 34 account for just 10% of homeowners, down from 19% in 1998 – a fall of 49%.
Matt Whittaker, chief economist at the Resolution Foundation, said: “Our findings highlight the extent to which the housing landscape facing young, working households on modest incomes has shifted in recent years. At the turn of the century, just over half of this group owned their own place; today it’s one-quarter. If that pace of decline continues, we can expect home ownership to be available to fewer than one-in-ten by the end of the next decade.
“With the average modest income household having to spend 22 years to raise the money needed for a typical first time buyer deposit – up from just three years in the mid-1990s – it’s no surprise that owning is increasingly a pipe dream for many.”
The number of younger modest income working households owning their own home in London has more than halved over the last decade, down to 13%. If the trend continues, it would all but end by 2025, falling below one in 20.
Younger modest income households in the capital are already more likely to live in social housing (17%). The number renting has gone up from 37% in 2003 to 70%.
Home ownership has been falling slowly since the start of the century, following a period of steady increase from the 1950s onwards and currently stands at around 63% today.
Whittaker said: “If we want to see an increase in working families being able to afford to buy, it is essential that the housing shortage is tackled by the government. Schemes such as Help to Buy can only ever help a minority – often providing a leg-up to those who would eventually climb onto the housing ladder anyway.
“More than half of those benefiting from Help to Buy to date have household incomes in excess of £40,000. It is hard to imagine any way out of the home ownership crisis facing those on low to middle incomes that doesn’t involve significantly boosting house building.”
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