Mon 04 Sep 2017
Rising rents mean that young people are paying out more than ever for housing while struggling to save for deposits in order to buy their own homes.
A report carried out by the Resolution Foundation last year found that higher prices mean those born between 1981 and 2000 ('generation millennial') will spend an average of £53,000 on rent before reaching 30, compared with the £9000 'baby bommers' had to find. Just 5 per cent of UK housing equity is owned by under 35-year-olds.
Almost half of all 25-year-olds owned their own home 20 years ago, compared with just one in five today, according to a study released by the Local Government Association last December.
The analysis highlights a significant drop in home ownership, which has reduced living standards for the young and led to a further concentration of wealth among older generations over recent decades.
Head of Sales and Marketing at Propertymark, Brian Schubert, said: "The effect we are seeing on this group is that many of them are living at home with their parents or are trapped in the rental system. Incomes have gone up very slowly since they have become adults."
Speaking at the time of the report, Laura Gardiner, senior policy analyst at the Resolution Foundation, said: "The nation's housing crisis is perhaps the most visible example of growing inequality between generations. Young people today are paying a heavy price for decades of falling home ownership. The struggle to get on the housing ladder has left many of today's millennials renting, at a time when it has become more expensive to do so."
Nearly two-thirds (63 per cent) of baby boomers had bought thier own home by the time they were 30. Home ownership for millennials by the same age is 42 per cent.
Combining the downward shift in home ownership with the rising cost of renting, the analysis found that millennials have spent £44,000 more on rent than the baby boomers by the time they reach 30, and £25,000 more than the generation just before them - generation X.
Brian added: "The solution we have put forward is that it really comes down to affordable housing. Ideally we need developments where people can pay a reasonable amount of rent, some of which they then get back towards a deposit on their own home. These are not unemployable people or those right at the lower-paid end of the social spectrum we are talking about; this is true for a great number of millennials."
The Foundation says that the extra spending on rent has reduced young people's living standards and made it harder to save for a deposit for a house. It notes that the extra spending on rent is more than the average deposit for a first-time buyer today of £33,000.
Ms Gardiner warned: "Britain's continuing failure to build enough homes means that unless we change course the struggle of young people to own their home is only going to get worse. The good news is that older generations are just as concerned about young people's struggle to own their home, and support for house building is growing across all age groups."