Young Londoners draw shortest straw in the housing market
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A new report shows young Londoners are increasingly disadvantaged when it comes to owning their own home.
The Resolution Foundation, a British think tank, recently published its annual Living Standards report. Perhaps unsurprisingly, the section on housing paints a sorry picture for aspiring homeowners.
The report shows that Londoners aged under 35 and on low to middle incomes (LMIs) have been hit disproportionately hard.
While homeownership was still just about the most popular form of tenure for this group in 1997-8, it has plummeted by two-thirds (67 per cent), from 40 per cent to just 13 per cent in 2014.
If home ownership continues to fall at the same rate, this number could fall below 5 per cent by 2025.
The report also shows a decline in the number of homeowners on a national level, which reflects the fact that house prices have risen much faster than incomes over the last decade.
Homeowners nationwide under the age of 45 also been affected, now accounting for only 27 per cent of homeowners.
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This is down 40 per cent since 1998, marking a 45 per cent reduction. Within that group, the number of homeowners aged 16-34 has seen a 49 percent reduction since 1998, from 19 per cent to 10 per cent.
While homeownership has dropped across all parts of the income distribution, the pressure has been hardest on those on LMIs.
LMI homeownership peaked at 73 per cent in 2000, but the number has since dropped to just 55 per cent in 2014 and it’s falling steadily. Although ‘higher income’ ownership has fallen as well – from 88 per cent to 76 per cent – this reduction only amounts to 13 per cent.
Alongside the sharp fall in ownership, there has been a surge in private renting. Where private renting was the least popular form of tenure until 2005 (10 per cent), it now makes up more than a quarter.
When looking at LMI households headed by people under 35, things get really bleak. Homeownership within this group has dropped from 57 per cent to just 25 per cent, and the report warns that if numbers continue to decline at the same rate, this will drop to 13 per cent by 2025 and fall below 10 per cent by 2030.
In contrast, private renting has soared by 139 per cent for under 35s on LMIs, from 22 per cent in 1998 to 53 per cent in 2014. Members of the group are now twice as likely to live in private rented accommodation as in their own home.
Read the full Resolution Foundation report here.