About 40% of young adults cannot afford to buy one of the cheapest homes in their area even with a 10% deposit, according to a new research. The Institute for Fiscal Studies said house prices in England have risen by 173% over two decades.
But average pay for 25-34 year-olds has grown by just 19% over the same period.
In 1996, 93% of those with a deposit who borrowed four and a half times their salary could purchase a home but that fell to 61% in 2016.
The IFS also said that higher rental costs – up from an average £140 a week to £200 a week in England – have “reduced the purchasing power of young adults’ incomes” and made it harder to save for a deposit.
Bradley Tucker, a 27-year-old recruitment worker from King’s Langley in Hertfordshire, is struggling to save for a deposit.
He and his partner have moved from a rented flat to a shared house, so they can start to save something.
But while his dad – a bricklayer – managed to buy a house after just one year, Bradley estimates it will take them at least a decade.
“On a current trajectory, the cheapest deposit is £15,000 to £20,000, so you’re looking at 10 years plus,” he told the BBC.
“For young people, it seems an almost impossible challenge. It’s a depressing outlook.”
The IFS said that it is key for the government to increase the supply of homes.
It said that planning restrictions, such as within the Green Belt, prevents the construction of new homes in response to demand.
“Without increasing supply, policies to help young adults get onto the housing ladder will continue to push up house prices – and potentially rents too, which would hurt those young adults who will never be able to buy their own home,” it said. Read more
