LONDON, Feb 16 (Thomson Reuters Foundation) - Homeownership among young adults in Britain has plunged over the last two decades as property prices have climbed dramatically faster than incomes, researchers said on Friday.
Adults aged 25 to 34 and earning between 22,200 pounds ($31,182) and 30,600 pounds experienced the sharpest decline in homeownership of any group since the 1990s, according to a report by the Institute for Fiscal Studies (IFS).
Just 27 percent owned their own home in 2015-16, compared to 65 percent in 1995–96, the British research institute said.
The plunge in homeownership is primarily due to a rapid rise in property prices relative to incomes, the IFS said, making buying a home more inaccessible to young adults than it was in the past.
“Our conclusion is simply that increases in house prices relative to incomes of young adults can fully explain what’s happened,” said Andrew Hood, senior research economist at the IFS and one of the authors of the report.
Over the past 20 years, average house prices have grown around seven times faster than the average incomes of young adults, the IFS said.
For nearly 90 percent of this age group, average house prices are more than four times what they earn each year after tax, individually or together with a partner.
Twenty years ago, fewer than half of young adults faced similar circumstances, the IFS said.
While homeownership among middle-income young adults has declined across Britain, it fell most sharply in the southeast, the figures showed.
Homeownership rates for middle income young adults may stabilise over the next few years, however, since house price growth has began to slow in most parts of Britain, Hood said.
“Given what we find about the relationship between house prices and home ownership, you might expect the decline in home ownership to start flattening off,” he said.
$1 = 0.7119 pounds Reporting by Ana Ionova. Editing by Astrid Zweynert @azweynert.; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights, climate change and resilience. Visit news.trust.org