personal finance

Number of young families owning homes rises after 30-year fall

A three-decade period in which it became ever harder for young families to buy their own home has come to an end, analysis of official statistics has revealed.

House prices have fallen or remained stagnant over the last two years, in part because of Brexit uncertainty, enabling 190,000 more young families to become homeowners and reversing the downward trend since 1989.

The biggest increases have been in Yorkshire and the Humber, Scotland and the north-west, where the proportion of young families who are homeowners has risen by between 4.6 and 8.4 percentage points in the period.

The Resolution Foundation thinktank calculated the figures from government surveys dating back to 1961.

Ownership rates among families headed by 25 to 34-year-olds peaked in the 1980s, reaching 51% by 1989. The figure halved to 25% in 2016, the lowest level since at least 1961,but rose again to 28% this year.

Home ownership rise

Resolution attributes the reversal to banks offering larger mortgages – of around 85% of value, up from a cautious low of 75% in 2009 – a slowdown in house price growth from 9.4% in late 2014 to 3% this year and stamp duty relief for first-time buyers.

High numbers of young households buying in places such as Lancashire, Bedfordshire and Leicestershire may also be attributed to people’s increasing willingness to move out of big cities in search of affordable homes.

Resolution said, however, that renting would continue to be the norm for young people, particularly in cities where a shortage of homes would continue to drive higher prices.

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The proportion of young households sharing with others in the private rented sectorhas risen from 3% in the late 1980s to 12% now. In places such as Brighton and Bristol, around a third of young families live in shared rented accommodation.

Home ownership falls

Daniel Tomlinson, a research and policy analyst at Resolution , said: “Recent conditions in the housing market as we move away from the immediate aftermath of the financial crisis are finally helping more young families to buy a home of their own, but the long-term drivers of lower ownership rates are here to stay.

“Home ownership rates for young families are barely half as high as they were back in the late 1980s, while fewer than one in five own in many of Britain’s major cities.”

London, Birmingham, Liverpool and Manchester had some of the lowest home ownership rates for 25 to 34-year-olds, at 17 to 18%. Chorley and west Lancashire, Leicestershire and Rutland and south Hampshire had ownership levels of 40% or more.

The Resolution Foundation said 1.4 million more young families would be homeowners today if the ownership rate had remained at the late 1980s peak.

The Institute for Fiscal Studies said in February that average house prices had risen about seven times faster than young adults’ average incomes in the last 20 years. It found that house prices had increased by 152% when taking account of inflation since 1995, while wages had risen by 22% in real terms.


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