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Number of 25-year old homeowners has halved in last two decades

Wednesday 21st December 2016

Analysis carried out by the Local Government Association (LGA) has revealed that home ownership rates among 25-year-olds have fallen by more than half in the last 20 years. 
 
While 46% of all 25-year-olds owned their home 20 years ago, that figure only stands at 20% today, with younger buyers finding it increasingly difficult to get onto the housing ladder.
 
A lack of affordable homes, high deposits and tougher mortgage criteria have all played a part in this, leading the LGA to warn that homes for affordable or social rent are vitally important to enable more families to save up the deposit for their own home. 
 
Currently, that is not the case, with only 6,550 social rented homes built in 2015/16, a massive drop of 88% from 20 years ago when 56,950 homes were built.  
 
As things stand, private renters pay on average 34% of their total household income on rent, while social and affordable renters pay 29%. By contrast, homeowners pay out an average of 18% of their total household income on mortgages. Those who own their own home outright, of course, face no housing costs. 
 
LGA's research also revealed that average house prices are now 7.9 times the amount of average earnings. Meanwhile, the average size of a deposit for a mortgage is 62% of annual incomes. In London, this rises to an astonishing 131%.
 
The LGA represents over 370 councils in England and Wales and has cautioned that a fall in social and affordable housing, coupled with rents rising way above earnings, is making it very tough for people to get onto the housing ladder. 
 
Consequently, the number of homeowners of all ages across the UK has also been slashed, by 4.4% since 2008, while the number of private renters has increased by 5.4%.
 
As well as building more social rented homes to grow levels of home ownership, the LGA also says there is an urgent need to provide better housing for the elderly. 
 
According to the latest figures, 74% of predicted household growth between now and 2039 will be made up of households with someone aged 65 or over. As such, an uptick in the proportion of age-friendly housing will be needed to help “older people stay healthy and happy for longer, and reducing demand on NHS and care services”.
 
Cllr Martin Tett, LGA housing spokesman, said of the findings: “Our figures show just how wide the generational home ownership gap is in this country. A shortage of houses is a top concern for people as homes are too often unavailable, unaffordable and not appropriate for the different needs in our communities.
 
“The housing crisis is complex and is forcing difficult choices on families, distorting places, and hampering growth. But there is a huge opportunity, as investment in building the right homes in the right places has massive wider benefits for people and places.”
 
He added: “There is no silver bullet and everyone must come together to meet the diverse housing needs in our villages, towns and cities. The Government’s Housing White Paper is an opportunity to boost housing supply and affordability. It must recognise that a renaissance in housebuilding by councils will be crucial to helping ensure the mix of homes to rent and buy that are affordable for those people that need them.”
 
              

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