On Sunday 7th January 2018, a pop up Pug Cafe will be coming to BirminghamWritten by Sophie Woodley on 13th December 2017
Millennials Half as Likely to Own Their Own Home
Last week, Resolution Foundation published a report revealing the intergenerational disparity in the housing market
The Intergenerational Commission compared the security, affordability, and quality of housing that different generations experienced – and found that young people are overwhelmingly worse off.
Millennials (18-35 year olds) are half as likely to own their own home as baby boomers. The report cites the increase in young people in higher education and waiting longer to have children as some of the factors contributing to this figure. They also found that the Right to Buy scheme in the 1980s and 1990s may also have caused this disparity.
On average, young people are four times as likely to rent privately than previous generations. This so called ‘generation rent’ are faced with a less attractive option due to low security of tenure and high rent prices.
Significantly, millennials spend 23 per cent of their income on housing, in comparison to baby boomers who spent 17 percent of their income at the same age, leaving 18-35 year olds with proportionally less disposable income.
“Millennials spend 23 per cent of their income on housing
Owning a home is still the best option financially. Mortgage owners spend 12 percent of their income on housing costs, whereas private renters spent 36 percent – almost three times as much. However, with millennials needing 19 years on average to save for a deposit, compared to the three years required of their parents, home owning is still an inaccessible option for many.
Although in some respects housing quality has improved – outside toilets, mass slums, and a lack of running water are mostly a thing of the past – on average young people are living in more overcrowded conditions. Longer commute times are also decreasing quality of life.
The report does anticipate that homeownership will increase in the next few years as we recover from the financial crisis, but this is still uncertain. The looming prospect of Brexit also casts doubt on this prediction, which is a major source of anxiety for many young people.
Second year Economics student Hannah Morrow said ‘The uncertainty of our future economic prospects, alongside the persistent housing crises, does not bode well for aspiring homeowners. For students looking to settle down and buy a home, this ideal is becoming increasingly unattainable’.
Overall, the commission finds that millennials are getting less for their money when we compare their experiences to previous generations. However, the authors suggest that there is hope in the prospect of future policy, akin to the Right to Buy scheme, which could improve this disparity.