UK house prices: Research has just quashed the myth that millennials don’t want to own homes
The myth fewer millennials own homes than previous generations because they prefer a nomadic lifestyle has been quashed by new research, which has suggested young people on middle incomes are less than half as likely to own their own home than previous generations at the same age.
The figures, by the Institute for Fiscal Studies, found just over quarter of those aged between 25 and 34 earning between £22,200 and £30,600 – the middle 20 per cent of the income scale – own a home. That is compared with 65 per cent of the same age group in 1995-6.
And although some have suggested behavioural factors, such as millennials’ enthusiasm for “digital nomad” lifestyles, may account for the fall in home ownership, the IFS quashed that view. Comparing a young adult today with a young adult 20 years ago whose income was similar relative to house prices, they are equally likely to own a home, the research found.
According to the research, average house prices have risen seven times faster than the average incomes of young adults: while UK house prices adjusted for inflation grew 152 per cent between 1996 and 2016, the average mean after-tax income for those aged between 25 and 34 has risen just 22 per cent.
For 90 per cent of millennials, average house prices are more than quadruple their average after-tax income, while for 40 per cent, prices are more than 10 times their income.
Not surprisingly, home ownership has plummeted in the South East, dropping 32 percentage points in 20 years. Across the rest of the UK, it has fallen more than 10 percentage points.
“Homeownership among young adults has collapsed over the past twenty years, particularly for those on middle incomes,” said Andrew Hood, a senior research economist at the IFS.
“The reason for this is that house prices have risen around seven times faster in real terms than the incomes of young adults over the last two decades.”
Read more: It’s official: London was the weakest region for house price growth in 2017