Published: Fri, February 16, 2018
Money | By Armando Alvarado

Researchers have quashed the myth millennials don't want to own homes

Researchers have quashed the myth millennials don't want to own homes

The IFS report looked at the relationship between the incomes of young adults and house prices in their region over the last 20 years, to explain the receding homeownership rates.

Just 27 per cent of middle-income adults aged between 25 and 34 owned a home in 2016, down from 65 per cent among the same age group in the mid-Nineties, the Institute for Fiscal Studies has found.

"Given what we find about the relationship between house prices and home ownership, you might expect the decline in home ownership to start flattening off", he said.

The Institute of Fiscal Studies found a third of this group are university graduates and nearly two thirds have children.

The IFS said that for 90 percent of 25-34 year-olds, average house prices were more than four times their after-tax income, while this was true for under half of 25-34 year-olds in the mid 1990s.

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Over the same period of time, average house prices have grown approximately seven times faster than the average income for young adults, with the former growing 152% and the latter growing 22% since 1995 when accounting for inflation. By contrast, the real net family incomes of those aged 25-34 grew by only 22% over the same twenty years. While those on middle incomes have seen the largest fall in ownership rates, those in the top income bracket have been least affected.

The IFS said young adults from wealthy backgrounds are now significantly more likely than others to own their own home.

The research found that those born in the late 1980s are much less likely to be home owners in their late 20s than their immediate predecessors. About a quarter of those born towards the end of Margaret Thatcher's government owned their own home at the age of 27 compared with a third born at the start of the decade and 43% of those born in the late 1970s.

The level of homeownership among young adults has "collapsed" over the past 20 years, with the sharpest decline felt among people on middle incomes, a think tank said yesterday. Between 2014 and 2017, 30 per cent of 25 to 34 year olds whose parents were in low-skilled occupations owned their own home, compared to 43 per cent of those whose parents were in higher-skilled occupations.

The IFS study also comes as UK Finance figures showed that first-time buyer (FTB) numbers a year ago reached the highest number since 2006, with 365,000 people getting on to the property ladder. Young peoples' incomes are now much lower relative to average house prices.

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