Life

Why millennials can’t even afford to buy the cheapest home in their area

Posted by
Susan Devaney
Published

It’s 2018 and millennials are finding it impossible to get on the property ladder. 

One milestone on many a millennials’ list that’s looking like it’s increasingly becoming an elusive dream is buying property. In other words, a cosy place to call your own.

And we’ve just about heard it all when it comes to reasons why millennials are greatly struggling to secure their dream – from consuming too many avocados to buying sandwiches like there’s no tomorrow.

But, if there’s an upside, it could be found in the newly released data from the Institute for Fiscal Studies as it basically confirms what we’ve all been thinking: increasing house prices are not relative to our salaries.

As house prices in England have risen by 173% over the past two decades, the average pay for 25- to 34-year-olds has only increased by 19%.

To put this into perspective: back in 1996, getting on the property ladder would’ve been in reach for 90% of 25 to 34-year-olds as long as they had a 10% deposit and were able to borrow four-and-a-half times their current salary.

In London alone, just one in three millennials can currently borrow the money needed to buy one of the cheapest homes in their area (with a 10% deposit, too).

Which is why just 35% of millennials in the UK own their own home – down from 55% in 1998. 

As house prices in England have risen by 173% over the past two decades, the average pay for 25-34 year-olds has only increased by 19%

The IFS also said that increasing rental costs are adding to the issue, too. Up from an average £140 a week to £200 in England, they have “reduced the purchasing power of young adults’ incomes”, making it increasingly difficult to save for a deposit.

“Big increases in house prices compared to incomes over the last two decades mean that it is increasingly difficult for young adults to get on the housing ladder, even if they do manage to save a 10% deposit,” said Polly Simpson, a research economist at the IFS who co-authored the report.

“Many young adults cannot borrow enough to buy a cheap home in their area, let alone an average-priced one. These trends have increased inequality between older and younger generations, and within the younger generation too.”

Just 35% of millennials in the UK own their own home – down from 55% in 1998

A report published a few months ago by SpareRoom, found that the average UK salary is currently around £27,600 (£34,473 in London) and the average house deposit has been estimated at around £33,000 (or £106,577 in London). With tapping parents for money not being a plausible option for most (just one in three anticipates help from parents), 87% of people in their 20s intend to save a deposit from their salary alone.

Want to know more? It’ll take Londoners 68 years to save for a deposit (yes, you did read that correctly).

However – if you live outside of the country’s capital, it’ll apparently take you a mere 25 years to save for one.

You could always buy yourself a flat-pack home instead?

Images: Unsplash / Getty 

Topics

Share this article

Author

Susan Devaney

Susan Devaney is a digital journalist for Stylist.co.uk, writing about fashion, beauty, travel, feminism, and everything else in-between.

Recommended by Susan Devaney

  • Life

    Millennials earn £8,000 less in their 20s than their parents did

    A new study reveals the extent of economic inequality between the generations.

    Posted by
    Moya Crockett
    Published
  • Life

    Millennials respond to advice that they could afford a house if they stop buying sandwiches

    “I dream of a world where millennials can afford both sandwiches and houses”

    Posted by
    Helen Booth
    Published
  • Life

    Millennials, this is how long it’ll take you to save for a house deposit

    Hardly seems worth it, really

    Posted by
    Susan Devaney
    Published
  • Life

    How loneliness is holding millennials back in life

    And it’s having a damaging impact on our mental health.

    Posted by
    Susan Devaney
    Published
  • Life

    This is how many millennials will never own their own home

    A new report has a gloomy outlook on housing prospects for 20- and 30-somethings – but it also suggests some solutions.

    Posted by
    Moya Crockett
    Published
  • Opinion

    So apparently mayonnaise is dead, and millennials are to blame

    A viral article suggests that the condiment is over, but we have some thoughts

    Posted by
    Hannah-Rose Yee
    Published

Other people read

More from Life

More from Susan Devaney