The dream of home ownership is becoming increasingly out of reach for young people, as average house price increases have massively outpaced wage growth, a new study out today has found.
Research by the Institute for Fiscal Studies (IFS) found average house prices in England have risen 173 per cent since 1997, while wages went up just 19 per cent.
This has led to the proportion of 25 to 34 year olds who own their own home dropping from 55 per cent to 35 per cent between 1997 and 2017.
The IFS said that with a 10 per cent deposit, 90 per cent of 25 to 34 year olds could buy a home back in 1996 if they borrowed four and a half times their salary. By 2016 only 60 per cent of young people could borrow enough to buy the cheapest home in their area.
Unsurprisingly, it's much harder for young adults in London to buy a home, as the IFS said 95 per cent of young adults would need to save six months' average wages to build up a 10 per cent deposit on an average-priced home in their area. That compares with just over half in Yorkshire and the north east.
The research also found that in London, even with a 10 per cent deposit, only one in three young adults could borrow enough to purchase one of the cheapest homes in their local area.
Polly Simpson, a research economist at IFS and a co-author of the research, said:
Big increases in house prices compared to incomes over the last two decades mean that it is increasingly difficult for young adults to get on the housing ladder, even if they do manage to save a 10 per cent deposit.
Many young adults cannot borrow enough to buy a cheap home in their area, let alone an average-priced one. These trends have increased inequality between older and younger generations, and within the younger generation too