Number of young homeowners rises for the first time in a decade
Saving to get onto the property ladder? Then take heart, as figures show 41% of 25 to 34-year olds now own their own home.
The number of young people getting onto the housing ladder has risen for the first time in 10 years.
Around 41% of people aged between 25 and 34 owned their own home in 2018/2019, according to the government’s English Housing Survey.
The increase marks a significant turnaround following a steep decline in homeownership rates among young people from 59% in 2003/2004 to just 36% in 2013/2014. It also bucked the overall trend for homeownership, with rates across all age groups remaining static for the sixth year in a row.
Meanwhile, the number of households renting in the private rental sector, while unchanged from the previous year at 4.6 million or 19%, has doubled since 2002.
Why is this happening?
The increase in homeownership rates among young people is likely to reflect the raft of government schemes available to first-time buyers.
While the flagship Help to Buy equity loan initiative, which enables people to purchase a new build property with just a 5% deposit, is available to anyone, figures show 81% of people who have used the scheme since its launch have been first-time buyers.
Other initiatives include the Help to Buy ISA, which is no longer available to new savers, the Lifetime ISA, and a stamp duty exemption for first-time buyers on the portion of a property’s value up to £300,000.
The fact that the number of people renting privately has grown significantly in size in recent years, suggests that this sector is absorbing the majority of people who are unable or unwilling to buy their own home.
Who does it affect?
While it is great news that more young people are able to buy a property, the survey also flagged up a fall in homeownership rates among older age groups.
Those aged between 35 and 44 were still most likely to be owner-occupiers at 55%, but the proportion who rent from the private sector has risen from 16% in 2008/2009 to 29% in the most recent survey.
There has also been an increase in people aged 55 to 64 living in rental accommodation, with 10% renting privately, up from 7% in 2008/2009, while 17% are in the social rental sector, compared with 14% 10 years ago.
The rise in older renters may reflect divorce rates among this age group, with people unable to afford to buy a property after selling the family home and splitting the proceeds.
What’s the background?
Despite the increase in homeownership rates among young people, the survey showed that overall owner occupation rates remained unchanged for the sixth year in a row at an estimated 15 million households, or 64%.
The proportion of people who lived in their own home increased steadily from the 1980s to 2003, when it reached a peak of 71%, before gradually declining to its current level.
The stagnation in homeownership rates is likely to have been caused by a combination of tougher mortgage affordability criteria following the financial crisis, and stretched affordability as a result of house prices rising faster than earnings in recent years.
Credit to Nicky Burridge @Zoopla