- Stagnant wage growth and rocketing house prices have caused home-ownership in adults to “collapse,” according to a report from the Institute for Fiscal Studies.
- Homeownership among young people has declined dramatically in the last 20 years, from 55% to 34% between 1996 and 2016.
- House prices have risen around seven times faster in real terms than the incomes of young adults during that period.
LONDON – Rocketing house prices and stagnant wage growth have caused home-ownership in young adults to “collapse,” according to a report from the UK’s Institute for Fiscal Studies.
As the chart below shows, UK home ownership has declined dramatically in the last 20 years, from 55% to 34% between 1996 and 2016, with the sharpest fall between 2005 and 2010 – when the rate fell by over 10 percentage points.
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.
Among that group, just 27% of people owned houses by 2015/16. That compares to 65% of people in the same bracket who owned a home in 1995/96.
Andrew Hood, senior research economist at the IFS and an author of the report, said house price rises outstripping wage growth had caused the dramatic decline in homeownership.
“Homeownership among young adults has collapsed over the past twenty years, particularly for those on middle incomes – for that group, their chances of owning their own home have fallen from 2 in 3 in the mid-1990s to just 1 in 4 today.
“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 last two decades.”
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