A recent study carried out by the Institute for Fiscal Studies (IFS), shows that rapidly increasing house prices are pushing young adults – whose salaries don’t compete – out of the market
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.
In particular, the study found that those to be most at risk, are young adults aged between 25-34 years old who earn a middle salary.
This could lead to extended periods of renting for many young professionals including teachers, designers and nurses.
The IFS study shows that 2/3’s of the young adults at jeopardy, are either university graduates or had left school at 16, while three-quarters of those affected either have children or live with a partner.
The conservatives say the issue is an “iceberg” waiting to cause damaging effects for them at the next election. The news comes as the party faces growing pressure to build more properties in the UK.
Since the 1990’s, house prices have rocketed by 152%, whilst the average family net income has grown by just 22%.
Research into the phenomenon indicates that in 1995-96, 65% of young people owned their own home compared to just 27% in 2015-16.
Many socio-economic traits such as occupational class of parents, education and occupation were considered to conduct the research.
Figures indicate that young adults who come from disadvantaged backgrounds are less likely to own their own home compared to those that don’t. In 2014-17, a third of 25-34 year olds whose parents were in a low occupational class, owned their own property compared with 43% of those whose parents were in a higher occupational class.
To see the full Institute for Fiscal Studies report, click here.
