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'Jilted generation' won't be able to afford their own home, study says
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.
[House prices on course to pass pre-crisis peak levels]
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.
