A think tank has presented a gloomy outlook for would-be homeowners looking to take their first steps onto the property ladder. It claims that most working households on average incomes will be forced to rent for the indefinite future.
Analysis from the independent Resolution Foundation body indicates that for this group, home ownership will approach just one-in-ten by 2025.
Decline
With the largest decline in young families owning property is for those on modest incomes, it has also slipped for those that are on benefits and on higher incomes.
As a result of this, home ownership is becoming more and more the domain of older and wealthier households.
Data from the analysis shows that those aged 65 or older now make up 32% of all homeowners. By contrast, those aged between 18 and 34 account for just 10%, down from 19% in 1998.
In addition, under 35 modest income working households have also recorded sharp declines. Homeownership has dropped from 57% in 1998 to 25% at present. In contrast, levels of private renting have more than doubled, from 22% to 53%.
Young, would-be homeowners stuck in rental properties
Capital pains
This decline is more harshly felt in London, where the proportion of younger people on modest incomes owning their own property have fallen to 13% over the last ten years. This is a drop of more than 50%.
Should this trend continue in the capital, young homeowners on modest incomes would slip to less than one-in-twenty by 2025.
Nationally, homeownership currently stands at around 63%.
‘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-1990’s-it’s no surprise that owning is increasingly a pipe dream for many,’ observed Matt Whittaker, chief economist at the Resolution Foundation.[1]
‘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,’ Whittaker added.[1]
[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/figures-show-why-private-rental-sector-is-dominated-by-young-tenants