Homeownership among young adults has risen 6% over the last eight years to 39%, but this still represents a “collapse” from ownership levels at the start of the century, data from the Institute for Fiscal Studies shows.
Homes owned by 25 to 34-year-olds in 2022–23 are 20% lower than the 59% levels young adults enjoyed in 2000, according to the thinktank.
This slump in homeownership among younger people was sparked by tighter lending, rising house prices, and lower incomes following to 2008 financial crisis.
IFS associate director Jonathan Cribb says: “The collapse in homeownership among young adults has been central to policy concerns for a while — not surprisingly given that out of every 100 young people there were 20 fewer homeowners in 2022 than in 2000.”
The recovery since 2015 has been concentrated among those on middle incomes (between £29,000 and £41,000), according to the study and may be linked with the fact that disposable incomes of young adults have grown faster over the last eight years than the rest of the population as a whole.
Average disposable incomes for 25- to 34-year-olds rose by 9% between 2015 and 2023, compared with 3% growth among the wider population.
It adds: “This modest recovery occurred both before and after the pandemic. Whether rising mortgage interest will bring this trend to a halt, or indeed reverse it, remains to be seen.”
But the report points out that “it is not yet clear what has driven this partial recovery”.
Another factor may be “a series of policy changes were aimed at getting more people onto the housing market” over this period.
These include reductions in stamp duty for first-time buyers purchasing a property under £500,000, stamp duty holidays during the pandemic, Help to Buy, the Help to Buy ISA and the Lifetime ISA, “though it is hard to know exactly how effective these were”.
The IFS’ Cribb points out: “The pandemic also meant almost everyone had to cut back on their expenditure, giving many a deposit that may have been harder to achieve otherwise.”
