There are many benefits to being a young adult – better health, more freedom, and almost-endless career options.
But being able to purchase your own home and moving out from under your parent’s wings is becoming increasingly difficult for many.
Over the last two decades, UK home ownership figures have revealed that approximately 40% of young adults are unable to enter the housing market. This is regardless of whether they have managed to work and save the necessary 10% deposit.
While only twenty years ago, 90% of young adults had the means to supply a deposit and obtain a loan for the remainder of the cost, data from 2016 shows it is now only possible for approximately 60%. Perhaps the area worst hit in the UK in London.
IFS (Institute of Fiscal Studies) research states that just one-in-three young adults will have enough money for a deposit and still be eligible for a loan on the remainder. Worryingly, these figures relate to houses on the low-end of the property market, those which would be ideal for people just starting out.
So why aren’t the younger generation able to participate in this ‘right of passage’ when their parents and grandparents before they were able to? The IFS states two main reasons for the current UK home ownership figures.
The first is the dramatic rise in house prices. Records indicate the price of a house in England has surged an astounding 173%. With most properties not benefiting from increased space or luxuries.
The other reason the UK home ownership figures indicate a lock-out of young adults from the housing market is due to their income not increasing at the same rate as general expenditures.
With their wages increasing only 19% over the last two decades, being able to support themselves while saving up for the deposit is only possible by an estimated 10%. For those already living outside of a home, the often high rent rates for small, or even shared-houses, eats away at any of these savings.
One possible solution that has been suggested is to ease planning restrictions. By allowing developers more flexibility and freedom, the creation of more new houses could help even out the market.
Other initiatives are also underway to aid young adults in entering the housing market, including the removal of stamp duty for those trying to buy their first home.