Getting on the property ladder is incredibly difficult right now because there are too many people looking to buy a home and too little amount of houses that are on the market.
This is making prices sky rocket across the country. What makes this situation worse is the fact that wages are not moving as fast enough to keep up with property price surges.
And it is for this reason that the era of homeownership is ending, according to the latest figures from think tank Resolution Foundation this week.
The think tank pointed out that homeownership has been in a major decline for the past 20 years and that it looks like that decline won’t be slowing down or stopping anytime soon:
The average price to buy a house in Britain now stands at £291,504, according to the Office for National Statistics. Meanwhile, the average London property price is at a huge £551,000.
People are not earning enough to keep up with rising house prices and Resolution Foundation data shows that lower- and middle-income households are spending 26% of their salaries on housing, compared to 18% back in 1995. In London, households spend 28% of their income on housing.
And it is for this reason that the generation that can least expect to own a home is the “millennial” bracket — defined by the Resolution Foundation as people born between 1982 and 2004. This is compared to generation X (1965-1981) and baby-boomers (1946-1964).
Here’s what the Resolution Foundation had to say (emphasis ours):
The issues raised by the differing income performances of working-age and pensioner households and the central role of housing in affecting incomes, come together in the form of drastic changes to homeownership rates.
Successive generations are facing totally changed housing landscapes, with levels of ownership among
Millennials being some 16 percentage points lower than those recorded by Generation X at the same ages for instance.
As a result, one-third of homeowners are now aged over-64 — up from one-quarter just 15 years ago. In contrast, 16-34 year olds account for just 10 per cent of owners, down from 19 per cent in 1998.
While homeownership has been trending downward since the turn of the century, it is low to middle income households who have recorded the sharpest fall in rates — more dramatic than for either poorer or better-off households.
Ownership looks on course to become little more than a pipedream for young working families on modest incomes. Where more than half of under-35s on low to middle incomes owned their own place in 2000, today it’s just a quarter. It’s likely to be approaching 1-in-10 by 2025; and more like 1-in-20 in London.
And here’s the depressing chart.
“The solid line shows homeownership rates by individual age in the four years between 2011 and 2014, with the dotted line setting out rates in the period 1998-2001. The lines are then coloured to show the experiences of different generations,” explained Resolution Foundation: