At Larkfleet we have always been keen to help the younger generation get on the housing ladder. Take Liam and Zoe and Chelsea and Martin.
We have been pleased to help both couples take the next steps in their home ownership journeys.
The IFS has found that the biggest decline in homeownership has been among young adults like our couples, with middle incomes. In 1995–96, 65 per cent of 25 to 34-year olds with incomes in the middle 20 per cent for their age owned their own home. By 2015–16 that figure had plummeted to just 27 per cent of that group owned their own home.
This group of young adults have after-tax incomes (including the income of a partner) of between £22,200 and £30,600 per year. A third of them are university graduates, and three-quarters of them live with a partner.
So why have home ownership rates changed so much for young adults over the past twenty years? The IFS found that this sharp decline in home ownership among young adults has been driven by the rapid rise in house prices relative to their incomes.
Over the past twenty years, average house prices have grown around seven times faster than the average incomes of young adults. The average UK house price was two and a half times higher in 2015–16 than in 1995–96 after adjusting for inflation, but the mean net family income of 25 to 34-year olds grew by only 22 per cent in real terms over those twenty years.
The IFS research also found that for nearly 90 per cent of 25 to 34-year olds, average house prices in their region are more than four times their annual after-tax family income; for nearly 40 per cent, house prices are more than 10 times their income. Twenty years ago, fewer than half of young adults faced house prices of more than four times their income, and less than 10 per cent faced house prices of more than 10 times their income.
Comparing a young adult today with a young adult twenty years ago whose income was similar relative to house prices, they are equally likely to own their home. The fall in homeownership is entirely explained by the fact that young adults’ incomes are now much lower relative to house prices on average.
The report’s author, Andrew Hood, a senior research economist at the IFS, said: “Home ownership among young adults has collapsed over the past twenty years, particularly for those on middle incomes – for that group, their chances of owning their own home have fallen from 2 in 3 in the mid-1990s to just 1 in 4 today. The reason for this is that house prices have risen around seven times faster in real terms than the incomes of young adults over the last two decades.”
Here at Larkfleet Homes and our sister company Allison Homes we hope to continue to be able to support first-time buyers obtain the home of their dreams.