Home ownership falls for middle-income young adults

Young adults with middle incomes are considerably less likely to own their own home than those born 20 years earlier, new figures show.

Research by the Institute for Fiscal Studies (IFS) found that from 1995/96, 65% of 25 to 34-year-olds with incomes in the middle 20% for their age group owned their own home. By 2015/16, this age group had fallen to only 27%.

This demographic experienced the sharpest decline, but home ownership fell for all young adults in the study.

A quarter of those born in the late 1980s owned a home at age 27, compared to 33% of those born in the early 1980s and 43% of those born in the late 1970s.

The IFS argues that this difference is down to the rise in house prices compared to largely stagnant income. In 20 years, house prices increased by 152% while incomes only grew 22% over the same period.

Andrew Hood, senior research economist at the IFS, said:

Home ownership among young adults has collapsed over the past 20 years, particularly for those on middle incomes.

The reason for this is that house prices have risen around 7 times faster in real terms than the incomes of young adults over the last 2 decades.

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