The barriers ahead of young people who want to get on to the housing ladder are increasing, rather than decreasing. A report from the Institute for Fiscal Studies (IFS) shows that home ownership among young adults has dropped from 55 percent to 35 percent in the last 20 years.
According to the IFS, says the biggest fall in home ownership is among middle-income young adults. Meanwhile, the average property price in England has grown by 173 percent in the same two-decade period, compared with income increases of only 19 percent in the 25-34-year age bracket.
While real house prices have not risen across much of the UK since 2007, in London they are up by 30 percent, by 8 percent in the south-east and 10 percent in the east of England.
The IFS says rising house prices benefit older generations while keeping younger people out of the home ownership market and entrenching and increasing intra-generational inequalities.
As part of its Green Budget, to be published on October 16, the IFS has identified the barriers to home ownership for the young and suggested policy options for the government that would have a positive effect on young people’s aspirations to get on the housing ladder and on the housing market generally.
One option is to give younger buyers an advantage over competitors in the housing market by reducing Stamp Duty Land Tax further – there are already first-time buyer exemptions in place in all jurisdictions in the UK – while increasing stamp duty for multiple-property owners among others.
The report does acknowledge that such a policy could actually increase house prices or rents or both in the current market.
A more likely option is to increase the supply of properties on the market through easing of planning restrictions that discourage developers from responding quickly to demand.
The ISF Green Budget is being produced in association with the ICAEW and Citi and funded by the Nuffield Foundation.