Britain’s current housing crisis is driving a worrying 50-year drain on living standards, according to a new report published today by the Resolution Foundation.
The average proportion of income that Britain’s families are spending on housing has trebled over the last 50 years, with young people today having to make do with longer commutes and smaller, insecure rental accommodation, the study found.
As Labour and the Conservatives head to their party conferences looking to learn lessons from the result of the snap General Election in June and the highest turnout amongst young people since 1992, the report starkly illustrates why the question of generational fairness and housing has become a totemic concern about living standards in Britain today.
The Home Affront report shows that each generation since the war has had to spend more of their income on housing.
The pre-war silent generation (1926-1945) spent just 7% of their income on housing at the age of 30. This figure more than doubled for the baby boomers (1946-1965), who spent 17% of their income on housing at that age. For millennials (1981-2000) now, they’re spending almost a quarter of their income on housing (23%) at age 30.
While housing costs have escalated, the baby boomer generation has been the biggest beneficiaries of improvements in the security and quality of housing that have taken place over this time, as homeownership spread.
Britain’s Housing Crisis Driving a 50-Year Drain on Living Standards
Those born in the late 1940s have enjoyed the highest ownership rates over the course of their lives, with each five-year cohort after them doing worse than their predecessors. Homeownership rates among young families born in the early 1980s are now around half that of those born 30 years earlier at the same age.
The Resolution Foundation notes that, while housing has been a growing drag on living standards for everyone, increased homeownership has boosted the wealth of older generations, as well as their income in later life, as a record proportion now own their homes outright.
In contrast, younger generations are being rewarded for the record amount they have to spend on housing with lower homeownership, greater insecurity and smaller homes, which are further from where they work.
The report shows that there are now as many young families (aged 25-34) living in the private rental sector as owning a home or living in the social rental sector combined (36%).
It also found that average floor space has fallen by 4% since 1996 for people aged under 45, while it has risen by 2% for those aged 45 and over. Young people today are also compromising on location, with millennials set to spend an extra 64 hours a year commuting to work by the age of 40 compared to baby boomers.
Home Affront warns that, while the passing of the financial crisis means that some young households will be able to become homeowners, the outlook for younger generations is on course to continue deteriorating.
Even in an optimistic scenario in which homeownership for young people catches up with the generation before them, the age at which most families will own their own homes could be delayed until their 40s – a decade later than when baby boomers got onto the property ladder.
Such a delay would mean that many more first time parents living in private rental accommodation, where two-month eviction notice periods are the norm, and facing the daunting prospect of having to save for a deposit while facing childcare costs.
The Resolution Foundation is calling on all political parties to make addressing Britain’s housing crisis a central feature of their domestic policy agenda, as it is a big part of the answer to ensuring that each generation continues to do better than the one before them. Bold policy action should include boosting housing supply and reforming the private rental sector so that it offers the quality and security that families need, the organisation insists.
Lindsay Judge, the Senior Policy Analyst at the Resolution Foundation, says: “The shock election results of the last 15 months have shown that significant discontent exists about the direction that Britain is heading, and housing is huge a part of this anxiety. Across the generations, many are worried about why today’s young adults have it so hard when finding a secure place to live.
“Britain’s housing catastrophe has been 50 years in the making but, while its effects are widespread, it is millennials who are truly at the sharp end. For older generations at least, rising housing costs have been accompanied by improvements in the quality and security of housing, as more families have been able to own their home.”
She continues: “The big danger today is that young people are having to settle for lower quality, longer commutes and less security in order to afford a place to live, despite spending a record share of their income of housing.
“It is vital that all political leaders recognise the scale of Britain’s housing crisis, which is placing an ever greater strain on families’ living standards, so that their response is suitably radical.”