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.
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.”
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