As the typical UK house price rises to six times annual earnings, should young people forget about ever buying?

Ben Southwood and Lindsay Judge
Property Owners Braced For Interest Rate Hike
House prices have regained their pre-crisis peaks across Britain (Source: Getty)

Ben Southwood, head of research at the Adam Smith Institute, says Yes.

Unless something changes, few of today’s youth will ever own their own homes – there is simply not enough housing to go round.

Home ownership has been falling, generation by generation. When they were 45, around 80 per cent of the cohort born in 1946 owned their own place, compared with 65 per cent of those born in 1971 when they reached the same age. Sixty per cent of the 1971 vintage owned their own property by the age of 30, but of those born in 1986, only around 40 per cent did.

It’s yet lower for my own crop. This is because housing supply is so heavily constricted. Planning restrictions make it difficult to build upwards on bungalows in London’s Zone 4 or terraces in Zone 1. And they are completely choking off development in the green belts which surround English cities.

Supply and demand works in housing like in so many other markets, and if we don’t let the market provide, most of today’s youth can kiss goodbye to the idea of having a home to call their own.

Lindsay Judge, senior policy analyst at the Resolution Foundation, says No.

Two decades ago, it took an average household three years to save up for a deposit on a house. Today it takes 22. Small wonder then that today’s young people feel despondent about their prospects of ever owning a home.

But that doesn’t mean they should give up on the idea. Here’s three reasons why.

First, owning a home is a key way to accumulate wealth. As pension provision becomes increasingly frayed, this is something young people should keep in mind.

Second, not getting on the housing ladder usually means a longer stint in the private rented sector. Renting may be fine – if expensive – when footloose and fancy free, but it’s a less attractive option when children and work make stability more important.

And third, the aspiration to one day own a home remains as strong as ever. Rather than give up on the home owning dream, young people – and older generations too – should press policy-makers to start addressing our housing crisis.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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