'˜Collapse in home-ownership among young adults' - report

The Institute for Fiscal Studies (IFS) said that, in 1995/96, two in three (65%) of 25 to 34-year-olds on incomes falling into the middle 20% bracket for their age group were home-owners.

But by 2015/16, just one in four (27%) of this group owned their own home.

The IFS said this group of young adults is made up of those with after-tax incomes of between £22,200 and £30,600 per year, including any money coming in from a partner.

A third are university graduates, three-quarters live with a partner and around 60% have children.

Andrew Hood, a senior research economist at the IFS and an author of the report, said: “Home-ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes - for that group, their chances of owning their own home have fallen from two in three in the mid-1990s to just one in four today.

“The reason for this is that house prices have risen around seven times faster in real terms than the incomes of young adults over the last two decades.”

Average house prices were 152% higher in 2015/16 than they were 20 years earlier after adjusting for inflation, the report said.

By contrast, the real net family incomes of those aged 25-34 have increased by only 22% over the same period.

At 27%, the home ownership rate of middle-income young adults in Britain is now closer to those with low incomes than it is to those on high incomes, the IFS found.