Homeownership in the UK is in decline, with the average age of buying a property rising year on year. Between the pandemic, oncoming recession, low wage growth and countless other economic factors, prospects for getting on the housing ladder are becoming bleaker. But who is to blame?
Some ‘boomers’ like to claim that millennials can’t afford to get on the property ladder due to frivolous spending on non-essentials like coffees and holidays. While it is of course true that some are better than others at managing their money, the argument that we simply need to crack on and stop ‘wasting money’ is out of touch with reality.
According to PricedOutUK statistics, to afford the £74,000 average house deposit, renters would need to give up 561 years of Netflix, 25,965 oat milk lattes and 86,047 avocados. And with high energy costs, sky-high rents and inflation hitting 10 per cent, saving for a mammoth deposit is for many simply impossible.
And even for those who could afford to put some money away every month, who can seriously blame a young person for indulging on the odd avocado toast or cheap get away, when buying a property seems so out of reach?
Of course, saving is without a doubt a crucial part of buying a house; no one expects to afford such an investment easily. It is also true that many young people have little financial knowledge, and have failed to invest much time in learning about interest rates or mortgages. But saying that the problem is mainly due to reckless spending is simply untrue. It is the result of an acute housing shortage where people want to live, tight planning rules, and stagnant wage growth that has led us to this state.
Wages are failing to keep up with the the rise in house prices. ONS data show that while housing prices increased by 14 per cent in 2021, average earnings fell by nearly 1 per cent.
The problem is clearly getting worse, and faced with a recession it may well be that students leaving university will struggle to find a job. And even when they do so, the cost of student loan payments deducted from their wages act as yet another tax on their income, with the average graduate of 2021 incurring around £45,000 of loan debt.
This is of course exacerbated by the pandemic and the restrictions on schools and universities. A whole generation has had their education disrupted, wasting money and time on courses where it was prohibited to use facilities and learning was only online. This is likely to have put the breaks on career progression, before they can even think of getting on the housing ladder.
But, is there hope for the future? Ultimately there is a lack of supply, a lack of well-paid jobs, and a lack of affordable houses.
Solutions that fail to focus on the supply-side are doomed to collapse. And there are only so many economisations young people can make in order to save for a deposit. If the government wishes to gain support among millennials and Gen Z-ers, it must make the housing crisis its top priority. It is only by increasing homeownership in this demographic, that people will feel they have a proper stake in society.