Home ownership is becoming a pipe dream for younger workers, think tank warns
Owning a home is set to become a pipe dream for young workers on modest incomes, according to new research.
Data from the Resolution Foundation found it is becoming increasingly difficult for young people on modest incomes to get onto the housing ladder, with just one in 10 set to be a homeowner by 2025.
While the biggest decline in young families owning homes is for those on modest incomes, it has also fallen for young households that are on higher incomes or are benefit dependent.
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The Resolution Foundation defines modest income working households as working-age households who are in work and in the bottom half of the income distribution.
The analysis shows that young (under-35) modest income working households recorded especially sharp declines, with home ownership falling from 57 per cent in 1998 to just 25 per cent today. In contrast, levels of private renting have more than doubled, from 22 per cent to 53 per cent.
The situation is even worse in London. The proportion of younger modest income working households owning their own home more than halved over the last decade, falling to just 13 per cent.
If home ownership continues to decline at the same rate in the capital for this group, it would fall severely by 2025, dropping below one in 20.
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"With the average modest income household having to spend 22 years to raise the money needed for a typical first time buyer deposit – up from just three years in the mid-1990s – it’s no surprise that owning is increasingly a pipe dream for many," said Matt Whittaker, chief economist at the Resolution Foundation.
"If we want to see an increase in working families being able to afford to buy, it is essential that the housing shortage is tackled by the government. Schemes such as Help to Buy can only ever help a minority – often providing a leg-up to those who would eventually climb onto the housing ladder anyway," he added. "More than half of those benefiting from Help to Buy to date have household incomes in excess of £40,000. It is hard to imagine any way out of the home ownership crisis facing those on low to middle incomes that doesn’t involve significantly boosting house building."