'Collapse' in home-ownership among young adults on middle incomes, study finds

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Research into the phenomenon indicates that in 1995-96, 65% of young people owned their own home compared to just 27% in 2015-16.

The rate of homeownership among young, middle-income adults in Britain has more than halved over the last 20 years, according to research that highlights growing generational strains in British society.

'Home ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes.

And at 27 per cent, the home ownership rate of middle-income young adults in Britain is now closer to those with low incomes than it is to those on high incomes.

The report found average house prices were a staggering 152 per cent higher in 2015/16 than they were 20 years earlier after adjusting for inflation.

Millennials are struggling to get onto the housing ladder and are much less likely to become homeowners than their counterparts two decades ago.

Only a quarter of young people with middle incomes now own a home in the United Kingdom, down from two thirds 20 years ago, a new report reveals.

The plunge in homeownership is primarily due to a rapid rise in property prices relative to incomes, the IFS said, making buying a home more inaccessible to young adults than it was in the past.

- Young adults from more disadvantaged backgrounds are less likely to own their home, even after controlling for the kind of job they have and other characteristics.

Christopher Furlong via Getty Images                   Labour's John Healey has said the report is a'wake up call for the government
Christopher Furlong via Getty Images Labour's John Healey has said the report is a'wake up call for the government

The average (mean) United Kingdom house price was 152% higher (2 ½ times as high) in 2015-16 than in 1995-96 after adjusting for inflation, but the average (mean) after-tax family income of 25 to 34 year olds grew by only 22% in real terms over those 20 years.

The average cost of a home across the country was £227,000 in December, which is £12,000 more than at the same point a year earlier.

Local newspapers accused the explosion in house prices of having "robbed" the younger generation of the ability to buy their homes.

IFS senior research fellow Andrew Hood said: "For those on middle incomes, their chances of owning their own home have fallen from 2 in 3 in the mid-1990s to just 1 in 4 today".

But Labour's Shadow Housing Secretary John Healey blasted the Government's response.

- The key reason for the decline is the sharp rise in house prices relative to incomes.

Housing minister Dominic Raab MP also told media: 'Through schemes like Help to Buy, we're helping more people on to the housing ladder and previous year saw the highest number of first-time buyers in the United Kingdom since 2006. "After nearly eight years of failure on housing, the government is still failing to tackle the fundamental problems with our broken housing market", he said.

Over the past two decades average house prices have grown around seven times faster than the average incomes of young adults.

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