Homes out of reach for 4-in-10 of the young

AROUND four-in-10 young adults in England would not be able to buy one of the cheapest homes in their area even if they managed to save a 10 per cent deposit, research has found.

As long as they had a 10pc deposit, in 1996 more than 90pc of 25 to 34-year-olds would have been able to purchase a house in their area if they borrowed four-and-a-half times their salary, the Institute for Fiscal Studies (IFS) said.

But it found that by 2016, even with a 10pc deposit, only around 60pc of young adults would have been able to borrow enough to buy even one of the cheapest homes in their area – leaving properties out of reach for the remaining 40pc.

The findings, looking at how barriers to home ownership have changed over the past 20 years, are contained in a chapter of the IFS Green Budget 2018.

The IFS said the extent to which property prices have raced ahead of incomes has made it increasingly hard to raise a deposit for a home.

The research found that after adjusting for inflation, average house prices in England have surged by 173pc since 1997, compared with an increase in young adults’ real incomes of just 19pc.

Polly Simpson, co-author of the research, said: “These trends have increased inequality between older and younger generations, and within the younger generation too.”