Are mid-earners locked out of buying a house in Thurrock?


The Institute for Fiscal Studies (IFS) said that, in 1995/96, two in three (65%) of 25 to 34-year-olds on incomes falling into the middle 20% bracket for their age group were home-owners.

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

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 aged between 25 and 34 are less likely to own their own home than those born even just five years earlier, research has found.

House prices have increased seven times faster in real terms than the average annual salary of a young worker.

Adjusted for inflation, the average United Kingdom house price in 2016-17 was 152% higher than in 1995-96, compared with a 22% rise in real incomes.

The IFS report looked at the relationship between the incomes of young adults and house prices in their region over the last 20 years, to explain the receding homeownership rates.

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Homeownership rates for middle income young adults may stabilise over the next few years, however, since house price growth has began to slow in most parts of Britain, Hood said. In 2014-17, 30% of 25- to 34-year-olds whose parents were in a low occupational class (e.g. delivery drivers or sales assistants) owned their home, compared with 43% of those whose parents were in a high occupational class (e.g. lawyers, teachers or estate agents).

The IFS study also comes as UK Finance figures showed that first-time buyer (FTB) numbers past year reached the highest number since 2006, with 365,000 people getting on to the property ladder.

Many first-time buyers are priced out of areas like London, where the average cost of a home has soared to £484,000.

Compared with twenty years ago, less than half faced prices over four times their income, and less than 10% had to deal with prices more than ten times their income. "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 25 years there has been a huge shift in regulation and taxation that has changed the game.

That followed the Help to Buy scheme introduced in 2013, which widened access to mortgage finance for first-time buyers unable to pay large deposits.

While homeownership among middle-income young adults has declined across Britain, it fell most sharply in the southeast, the figures showed.

There were also many interest only options, and many consumers did not need financial advice.