Councils issue warning as proportion of young home owners slumps


The proportion of 25-year-olds who own their own home has slumped from almost half 20 years ago to just a fifth, analysis shows as councils warn about the impact of the housing crisis.

A study for the Local Government Association (LGA) found there had also been an 88% drop in the number of social rented homes since 1995/96.

The LGA called for ministers to give councils greater powers to boost house building and take steps to ensure an increase in the number of suitable properties available for older residents. 

The analysis, carried out by estate agents Savills, found 46% of 25-year-olds owned their own home 20 years ago but that proportion is now 20%.

LGA housing spokesman Martin Tett said: "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.

"There is no silver bullet and everyone must come together to meet the diverse housing needs in our villages, towns and cities."

The LGA said the housing white paper due to be published by ministers in January must recognise the role councils can play in ensuring the supply of new homes.

In an indication of the difficulties faced by people trying to save for a deposit to get on the housing ladder, the study showed that private renters now pay 34% of their total household income on rent and social and affordable tenants pay 29%.

Meanwhile home owners pay an average of 18% of total household income on their mortgage.

Average house prices are now  7.9 times average earnings, the report said.

The average first-time buyer has an income of £40,000 and a deposit of £25,000 - 62% of gross income.

In London, the typical first-time buyer has an income of £65,000 and a deposit of £85,000 - 131% of income. 

The LGA report said: "Many first-time buyers across the country, and in particular in high value areas like London, are therefore dependent on help from the 'bank of mum and dad'.

"Home ownership for younger generations is increasingly determined by the extent to which their parents benefited from previous housing market booms."

The LGA also highlighted the need to act to provide housing for an ageing population.

Between 2008 and 2039, 74% of projected household growth will be made up of households with someone aged 65 or older.

The LGA said "age-friendly" housing will be crucial to help older people stay healthy and reduce demand on NHS and care services.

A housing commission established by the LGA recommended freeing councils from restrictions on borrowing to build more affordable homes and making it easier for local authorities to use compulsory purchase powers on land that has planning permission for homes but which is not being built on.

Other recommendations include enabling councils to "rapidly replace" homes sold through the Right to Buy scheme.

A Department for Communities and Local Government spokesman said: "We've halted the decline in home ownership, with the number of first-time buyers up nearly 60%, and over 335,000 households helped into home ownership through Government-backed schemes since 2010.

"We've also set out the most ambitious vision for housing of any Government since the 1970s, investing £9.4 billion over the course of this Parliament. Our upcoming housing white paper will clearly set out how we plan to build the homes this country needs."