Posted by: Property Booking
05 Mar 2018
Just one-third of 25 to 34-year-olds own their home today – compared to more than half of the same age group two decades ago. The figures, just revealed by the Institute for Fiscal Studies (IFS), show the huge discrepancy in the number of young people owning their own home compared to their parent's generation and beyond.
The reason for this gap, say economists, is the fact that house prices have grown far higher than household incomes since 1995/96. And actually, that increase is pretty massive at 125% for house prices and a mere 22% increase in incomes. Is it any wonder today's young folk are struggling to get on the housing ladder?
Shared ownership can help bridge the current housing discrepancy
Of course, figures like these are the reason companies like Property Booking exist – we make home ownership accessible and easy to understand for those who need it most. Shared ownership is a means of bridging this homeownership gap by allowing individuals, couples and families to part-buy their home. Not only is shared ownership far more affordable, it's also flexible.
That's because potential owners take out a mortgage for only the percentage of the house value they can afford (from 25% to 75%) and pay a subsidised rent on the remainder. The idea being, that as the years go on the amount owned increases and rental payments correspondingly decrease.
Middle-income households are worst faring compared to the past
Interestingly, further analysis of the IFS figures show that the biggest drop has been amongst 'middle income' young people. In 1995/96 around 65% of this group were homeowners compared to just 27% in 2015/16. ('Middle earners' were individuals or couples with a take-home pay if between £22.200 and £30,600.)
It's not surprising considering that it's not just house prices which have rocketed over the past two decades; the increase in utility bills reached almost crisis point a few years ago, while food costs have increased greatly – particularly within the past two years. Transport costs (train and bus travel) have also increased.
All these other rising costs means the chance of saving a whopping £20,000 deposit (at least) is as likely for some of today's young people as spotting a unicorn any time soon.
South East of England sees the biggest drop in young home owners
Although every region in the UK had seen a 10% drop when it came to home ownership amongst the mid-20 to mid-30 age group, young people in the South East of England fare particularly badly when it comes to buying property - thanks to large house prices rises in that part of the country. It has meant that 50% fewer in this age group now own their own home compared to two decades ago.
Shared ownership offers a great opportunity to get on the housing ladder in these locations, with low deposits and a combined mortgage and subsidised rent.
To see some of the fabulous new-build properties available across the UK, as well as further information on shared ownership eligibility, check out our range of shared ownership houses for sale, as well as our properties on shared ownership in London!
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