Only One Quarter Of Young People Can Afford To Buy Their Home
A recent report by MoneySuperMarket has emphasised that changing landscape of home ownership in the UK over the past thirty years.
In particular, the headline figure focused on the fact that there are now around a quarter of young people able to afford a home of their own in comparison to figures from 1991.
This has been largely attributed by the insurmountable and increasing gulf between house prices and wages. The report has stressed that in 1999 the average annual salary was equivalent to 23% of the average house price.
With lenders restricting the salary to house price ratio at six times a person’s income, the 1999 average of just short of four times the value of the average home meant that more people were able to afford a mortgage.
However, 2018 paints a very different picture as the average UK salary is only worth 11% of the average UK home. This means that without support, the majority of young people are unable to get anywhere close to independently affording a property.
In 1991, 51% of those aged between 18 and 34 owned their own home; this figure has shrunk to 24% in 2018.
The direct correlation has also seen a 30% increase in private rentals in this time. The 18 to 34 age brackets have increased their rental percentages from 56% to 73% in recent years as renting becomes the only viable solution to living independently.
Because it is so difficult to have the income necessary to buy a home independently, there has also been a huge shift in how young people buy property in 2018. According to the report, between 1994 and 2006, 31% of home owners purchased their property independently.
This figure has dropped to 20% in the present day. The 11% decrease in independent home buyers has been attributed to the steadily rising prices that have completely surpassed wage increases. In a bid to step onto the ladder, more people are buying properties in couples which has increased from 64% to 77%.
Whilst the budget has again tried to increase help for younger and first time buyers, the statistics may indicate the massive difficulties that could be faced in the future.
Is enough being done to help young people step onto the property ladder? Could this become a permanent shift that is going to make it difficult for young people to acquire property independently?