How serious is the issue of homeownership amongst young people?
By Will Leyland, 09 October 2018
We’ve just come off the back of conference season for the major political parties and one thing that was apparent was a real focus on young people in the housing market.
More specifically, the focus was on how to get more young people onto the housing ladder. Affordable housing is in short supply and a number of recent studies show that if the government has any designs on tackling the issue then they’ve got a hefty job on their hands.
According to BBC research, people in their 20s who want to rent a place for themselves face having to pay out an “unaffordable” amount in two-thirds of Britain. The measure, which says that monthly rent which exceeds 30% of their income is unaffordable, showed that a huge majority are struggling.
According to the BBC’s measure, a salary of £51,200 is needed to rent a one-bed London home.
The issue is more pronounced in the South East where rents are much higher, and much less so in the North and North West of England and in Scotland where rents tend to be lower. For investors it marks an interesting trend which has seen landlords flocking to cities like Manchester, Leeds and Sheffield where the home ownership rate is low, rental yields are high and demand is increasing.
According to the Financial Times, official data from the Office for National Statistics shows that the home ownership rate for people in their 20s has fallen by 10% in less than a decade.
This is a significant problem for the government which is trying everything they can to address the issue but is continually failing according to their own data.
However, it is worth asking whether this is quite as big a problem as it is made out to be. As the number of young people in the rental market continues to increase it is fair to say that the sector is taking steps to improve the rental experience and is doing everything it can to provide high quality living accommodation where it is most in demand.
When you also take into account the added flexibility on offer through renting it is no surprise that so many people are content to remain in the sector in the long term. A premium home which you can leave on short notice if you need to move for family or work is something not to be sniffed at.
From the perspective of landlords, good tenants who actively want to rent the best homes are the ideal target market as they will look after their property and can be trusted to pay bills on time.
The falling number of young people able to afford their own home is an issue – and one which all political parties are desperate to solve – but it is unclear whether it is quite as serious an issue as it is often presented. We know that many young people are already happy to continue renting in the long term and it is likely that more and more will choose similarly as the quality of homes and service in the sector continues to improve.
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