A report was recently released by the Institute for Fiscal Studies in which they touched on how young people are struggling to get on to the property ladder. For many young people nowadays its very common to have to rely on their parents to help take that step. While in decades previous it was common to be owning your first house by the age of 25!
In the late 1980s 25% owned their home by the age of 27 but ten years earlier in the 1970s it was 43%. This is indicating that gradually over time the amount of young people owning their property is decreasing. The main reason for the fall in ownership is due to wages not corresponding to the increase of house prices. In 2015-2016 almost 90% of 25-34 year olds faced average regional house prices of at least nearly four times their annual after tax income. Therefore its clear the young generation of today have been priced out of the market. This is a very relevant topic in Jersey which is experiencing the same problem as most of the UK.
How To Solve This Problem for Young People
Jersey’s way of combating this problem was by introducing the First Time Buyers scheme. This allows young people who haven’t owned a property before to receive reduced stamp duty when they purchase a property under £450,000. In theory this should help the Younger generation on to the property ladder as they are effectively paying less. However Mark Hayward from NAEA Propertymark believes the scheme benefits more the builders rather than the purchasers.
Additionally as a result of the house prices increasing, young people are having to turn to rentals in order of finding somewhere to live. Research from Propertymark indicates that young people are now spending an average total of £50,000 on rent before they buy. Once again highlighting firstly how long they have to stay in rentals before they have saved enough money. Secondly if the house prices don’t start to decrease we could see a rise in the rental market going forward.