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Home ownership for 25 year olds has halved over last 20 years
Over the last 20 years, home ownership among 25 year olds has more than halved, new research from the Local Government Association (LGA) and estate agent, Savills, has found. Their findings show that only 20% of those aged 25 own a property whereas 20 years ago, the figure stood at around 46%.
There are a variety of reasons for this including a lack of social housing, a lack of affordable housing, lower wages as well as higher rents and living costs. The LGA spoke about the importance of social housing to help young people and families to save for a home that they can own and afford to buy. They suggested that the government can tackle the shortage of affordable homes by encouraging councils to build new houses.
The survey found private renters pay 34% of their household income on rent and social housing renters pay 29% while an average mortgage amounts to 18% of a homeowner’s income. Although it may be cheaper month on month to own, it is the deposit which is the difficult financial factor for many. The survey found the average deposit is 62% of the average income of a 25 year old and in London, it is 131%.
LGA housing spokesman, Martin Tett, released a statement in conjunction with the survey findings, he said the government; “must recognise that a renaissance in house building by councils will be crucial to helping ensure the mix of homes to rent and buy are affordable for those people that need them… This means powers and funding given to councils to replace sold homes and reinvest in building more of the genuinely affordable homes our communities desperately need.”
In January, the government is set to release a white paper on housing supply in England and Wales. Many people and organisations will hope that these findings are used to help make positive changes to the housing market and its affordability.
The Local Government Association represents more than 370 councils in England and Wales and they have asked for more power when working with property developers to ensure that the correct amount of affordable homes are included in each new development.
They have also proposed to retain more cash from the sale of council houses which will be reinvested in building new and affordable homes. The findings of this study shows the generational gap when it comes to owning your own home and the LGA feel the proposals they have put forward will go some way towards fixing this.
With the construction of social housing down by 88% from 1995-96 to 2015-16, it was inevitable that home ownership would fall as a lack of supply and a rise in demand saw soaring prices.As home ownership falls for all age groups (down 4.4% since 2008), private renting rises (by 5.1%) which makes it more difficult for those aged 25 or those younger/older to save the huge amount that is needed for their house deposit.
As housing remains such a critical issue across the country at the moment, and with these survey findings showing the difficulties growing for so many, there is bound to be a lot of hope for radical plans to improve housing pinned on the government’s white paper released in January.