October
08
2018
Author
Natalie Williams
Will young people ever afford to own a home?

After graduating from university and working as a journalist for a couple of years, I moved back in with my mum. Originally I was only intending to stay for a few weeks, but I soon realised that the only way I would be able to afford to pay off my student debts and ever hope to own my own home would be if I stayed for longer.

We drove each other nuts, at first, as we adjusted to living together as adults rather than as parent and child. In those first two years, I kept thinking I’d soon earn enough from freelancing to move to London, rent with friends and save for the future. That was a pipe dream.

I ended up staying with my mum for almost 14 years! I paid rent, but probably about half the rate I’d have paid to a private landlord. I stopped freelancing and got a regular job in media and marketing. After a year, I was given a big pay rise, and suddenly I was earning enough to overpay the instalments towards clearing my student debts.

Fast forward to just two years ago: at the age of 38, with a 15% deposit for a flat and a reasonable income (it’s above the national average, anyway), I could still only find one mortgage provider who would lend to me for a modest flat in a slightly rougher part of town.

One lender was all I needed, though, to move out of my mum’s and into my first home of my own. At the time, instead of feeling frustrated at how long it had taken me to save to be able to become a home owner, I was just delighted that I wasn’t still going to be living with my mum by the time I turned 40!

Far from being rare, my experience of very much delayed home ownership is increasingly common and for those younger than me is becoming even harder. An Institute for Fiscal Studies (IFS) report out today says that 40% of 25-34-year-olds cannot afford the cheapest homes in their communities – even if they have saved a 10% deposit.

The shocking reality is that house prices in England have risen by 173% in the last 20 years, while the average salary for 25-34-year-olds has increased by just 19%. Now just 35% of this age group own a property, compared to 55% two decades ago, and compared to 80% of 65-74-year-olds.

Renting now costs significantly more too – it’s gone up from an average of £140 per week to now £200 per week in England – meaning that it’s less and less likely that renters can save a deposit to buy their own home.

Many of my friends in their 20s aren’t even considering buying a home. Their assumption is that they will never be able to afford to. A significant proportion of them seem to have resigned themselves to renting for their whole lives.

One think tank has suggested that the solution to this is for the Government to reward landlords who sell to long-term tenants. But the issue is far more complex than that. Many private landlords own properties as a retirement plan for themselves or to provide an inheritance for their children, and aren’t necessarily even looking to sell. While an increasing number of young people can’t afford to buy, there is a rising number of people who are expanding their property portfolios and becoming wealthier and wealthier on the back of their acquisitions, at the expense of people on the other end of the spectrum.

Equally, addressing the growing disparity between low-paying jobs and the cost of living is becoming critical.

Home ownership isn’t a right, but it should be a realistic aspiration. Having a place to call your own, to settle, to raise a family or build a community (or both), to secure your future, shouldn’t be beyond the means of an increasing proportion of young people.

 

To hear more from Jubilee+ on this subject, catch up with TWR UK’s news bulletin from midday today (8 October) via the ‘on-demand’ service on their website.