'Jilted generation' won't be able to afford their own home, study says
The National Housing Federation says this century's children face the prospect of carrying on living with their parents or paying ever-increasing rents.
High housing costs are preventing a generation from owning their own homes, a report by affordable housing charity the National Housing Federation (NHF) says.
The report, ‘Housing Britain’s Future’, says that 240,000 households were formed in England last year, but only 111,250 new homes were built.
It predicts a housing crisis for children born since the turn of the century when they reach adulthood, with many facing the prospect of living with their parents for years or paying ever-increasing rents if they do want to move out.
More children living at home
Figures from the Office for National Statistics show that nearly three million adults aged between 20 and 34 are currently living in a parental home. That’s an increase of half a million since 1997. And a further 700,000 young people are forecast to be in that position by 2020.
Higher property prices but same wages
The report says that the average price of a home for a first-time buyer in England in 2012 was £173,185. That’s nearly 10 times the average wage for 22- to 29-year-olds.
The NHF forecasts that the average price will increase to £245,165 by 2020, which is 16 times the average wage.
Meanwhile, the average wage is forecast to remain broadly the same.
The Government’s Help To Buy scheme, which is designed to help people onto the property ladder by lending cheap deposits and guaranteeing mortgages, is criticised in the report as a “sticking-plaster” solution. The NHF says that cheaper mortgages alone won’t solve the issue and simply risks inflating another property bubble.
Higher rents
The picture isn’t any rosier for young people who want to move out into rented accommodation. The average rent is forecast to rise by 46% by 2020.
And higher rents make it harder for young people to save for a deposit.
Another factor
While the report might be seen as unnecessarily gloomy, as house prices may not rise by as much as forecast, there’s another factor it hasn’t considered which could also impact younger people.
And that’s that tomorrow’s wannabe homeowners could be competing with their own parents’ generation when it comes to buying a home. That’s because future retirees will potentially be looking to downsize as a way to provide themselves with additional money for retirement, as they don’t have a huge pension to draw on.
This could push prices up as the two groups compete to buy the same type of property.
The NHF’s solution
The NHF started a campaign called Yes To Homes, which will call on councils across England to prioritise housing.
It says younger people need to become involved in lobbying local councils to build more affordable homes. Otherwise, it says they risk becoming a ‘jilted generation’.
What do you think should be done? Should young people even aspire to own their own homes? Let us know your thoughts in the Comments box below.
Compare the latest mortgage rates and get expert advice
More on property
How to save for a deposit
The people who affect house prices
Genie: national scheme means you can buy a house without a deposit
Home ownership falls for first time in nearly 100 years
Most Recent
Comments
-
According to the specualtion in the article, rents will rise by 46% by 2020, but incomes will not rise at all. I do not believe that these two hypotheses are reconcilable. Rents have to be paid by real working people from the real world. They cannot pay ever incrasing rents if their incomes do not rise!
REPORT This comment has been reported. -
@chuckwallah Absolutely no facts to back up your opinion. Putting council houses into private ownership also takes the huge burden of maintenance and the absurd tiers of council administration costs out of each property they sell. Misuse of the system and fraud undoubtedly happens, but where is there a government/council scheme which is 100% honest in delivering stated aims? I do find the whole premise of the article pretty stupid, however. The property market is grossly distorted in the UK with the correlation between earnings and property prices in much of the South of the country creating a problem which is wrongly extrapolated to make bold statements covering the whole of the UK. It may come as a shock to the Southern twits who seem to make up the vast majority of financial journalists - but standards of living, quality of life and affordability of property make living in the North of the country the smartest move possible. The Press Association is based in Howden, here in East Yorkshire, so clearly there are SOME journalists who know the truth of what life is like away from the major cities. Regarding the article's author defending his position against the rather crude and offensive criticism he received - it is about time that Lovemoney journalists DID challenge these silly surveys they insist on reporting and do some fundamental research. Financial institutions always seem to have a very partial outlook in these surveys and most of the charities appear as clueless of real world economics as the well-meaning but batty old dears who are the backbone of our charity shop organisations.
REPORT This comment has been reported. -
@ DLZ, I was talking about private purchases of council housing, not transfer of responsibilities. These purchases, at around 30% of the commercial rate, were (and probably still are) frequently put on the market as soon as legally possible at the maximum price obtainable. Often these buyouts were subsidised by a friendly local builder who would tart up the property to maximise the profits. @ coloratura, I think you have the wrong address, your comments are not relevant to anything I said.
REPORT This comment has been reported.
Do you want to comment on this article? You need to be signed in for this feature
30 July 2013