Millenial home buying – the reality of being a first time buyer
With the new tax year, how likely is it that 18-21 year olds nowadays will manage to buy a home of their own? Analysis by Independent thinktank, the Institute of Fiscal Studies shows that today’s young adults are significantly less likely to own a home than those born less than a decade earlier.
Aged 27, those born in the late 1980s had a homeownership rate of 25%, compared with 33% for those born in the early 1980s and 43% for those born in the late 1970s.
Unsurprisingly the main reason for the decline in home ownership among young people is the sharp rise in house prices relative to incomes.
Isha Lalli, 18 said “With the current housing situation, it will be hard to get on the property ladder. House prices are increasing rapidly and the demand is steadily rising. I feel I’ll have to rent for longer than I’d like before I can buy my own house”.
In 2015–16 almost 90% of 25- to 34-year- olds faced average regional house prices of at least four times their income, compared with less than 50% 20 years earlier.
But it’s not all doom and gloom.
The number of first time buyers was at its highest since 2006. According to the English Housing Survey, there were 671,000 first time buyers in England during 2016-17.
The Council of Mortgage Lenders analysis of 2017 property transactions showed a shift away from buy-to-let and cash in favour of first time buyers.
The Bank of England’s Agents’ survey suggested that some of this strength in first time buyer activity is down to demand for new-build properties using the Help to Buy equity loan scheme and other government schemes such as the Help to Buy ISA.
Housing policy is important to both major UK parties. Read about the Conservative’s approach to helping first time buyers and Labour proposals to support young adults buying their own home if the party gets into government.
Infographic: Caroline Paul