LONDON (Reuters) - Britons who are now in their early thirties have half the wealth that people born 10 years earlier enjoyed at the same age, due to a combination of surging property prices and less generous pension schemes, a report published on Friday showed.
People born in the early 1980s have a median net household wealth of 27,000 pounds ($35,000), about half the level that people born in the 1970s had at the same age, the report from the Institute of Fiscal Studies think tank said.
The 1980s generation was also the first post-war age group that did not start adulthood with incomes higher than the previous generation, because of a stagnation of working-age incomes over the past decade.
“Sharp falls in home-ownership rates and in access to generous company pension schemes, alongside historically low interest rates, will make it much harder for today’s young adults to build up wealth in future than it was for previous generations,” Andrew Hood, an IFS economist, said.
New British Prime Minister Theresa May has highlighted the difficulties young people face buying homes, something which has earned them the epithet ‘Generation Rent’.
People born in the early 1980s had much lower home ownership rates in early adulthood than any other post-war age group, the IFS report showed.
Average house prices in London rose by 220 percent between August 1999 and August 2014, while average prices across England rose by 140 percent, housing charity Shelter has estimated.
Renters’ housing costs were almost twice those of home owners, swallowing 28 percent of the income of renters aged 26 to 30, the IFS study found.
Earnings growth was the key determinant of future living standards, Hood said, something the government could improve through long-term investment to raise productivity.
Inflation-adjusted income for those aged 25 to 55 grew by only 2 percent in total between the financial years of 2004/05 and 2014/15, compared with growth of 26 percent in the 10 years to 2004/05, the IFS found.
Younger cohorts would also struggle to accumulate the pension wealth of their predecessors, especially compared to income, the report found, and would face greater uncertainty about future living standards.
Separately on Friday, another survey from investment company Scottish Friendly showed over half of British grandparents planned to save for their grandchildren, partly to help them on to the property ladder.
($1 = 0.7696 pounds)
Reporting by Helen Reid; editing by William Schomberg and Mark Trevelyan