Getting a foot on the property ladder is now out of reach for many young people
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 10 per cent deposit, in 1996 over 90 per cent 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, that proportion had fallen substantially.
By this time, even with a 10 per cent deposit, only around 60 per cent 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 40 per cent.
In London, only around a third of young adults with a 10 per cent deposit could borrow enough to buy one of the cheapest homes in their area, researchers found.
Back in 1996, if they had borrowed four-and-a-half times their salary, 90 per cent of young adults in London could have done so.
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 – which will be published tomorrow.
Polly Simpson, a research economist at the 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 averagepriced one.
“These trends have increased inequality between older and younger generations, and within the younger generation too.”
The IFS argued that easing planning restrictions would increase home ownership and reduce both property prices and rents.