Keeping a roof over your head is one of life’s most pressing financial responsibilities. If yours is like many household budgets, money you spend on housing represents a substantial portion of your monthly financial commitment. Although each person’s circumstances are unique, spending trends show many UK residents are in the same boat, paying a much higher share of their incomes toward housing than their parents and grandparents did.
Climbing Costs Slam Young People
Findings recently shared by the Resolution Foundation illustrate a stark contrast between young Britons’ housing experiences and those of prior generations. According to the group, the younger generation may indeed be paying as much as three times the housing costs their grandparents paid. People in their seventies and eighties, for example, paid around 7 per cent of their income for residential housing. Members of the subsequent generation, baby boomers (now in their fifties and sixties), paid closer to 17 per cent of their incomes toward housing. It is thought young people in their twenties and thirties now pay about 23 per cent of their earnings to cover housing costs.
Generational differences are also noted in ownership trends, with young people waiting longer to become home owners. While their parents may have been fortunate enough to buy houses in their thirties, the next generation of prospective buyers will most likely be forced to wait until they are at least forty, before entering the housing market for the first time. In addition, as they wait to become owners, young people are faced with longer commutes to their jobs and less living space at home.
According to the Foundation report, residents under the age of 45 have seen their living space shrink by 4 per cent since 1996 – even as floor space has grown by 2 per cent for people older than 45. While the contrast is not earth-shattering, it is yet another of the symptoms facing young people coming to terms with changes to their housing conditions.
Decades in the Making
Whether or not you believe the housing problem has risen to a catastrophic level, it is hard to deny the UK’s current crisis. And it didn’t happen overnight. Unfortunately for members of the younger generation, the culmination of years of deterioration in the housing market now leaves them bearing the brunt of the difficulties.
Though alternative financing such as no-credit-check funding options can help young people navigate financial shortfalls, the Resolution Foundation is asking the government for lasting solutions to the housing crisis.
Conservatives in government have long leaned on access to affordable housing as a reliable source of support. Unfortunately for Tories, a diminished number of home owners means fewer backers at the polls. Until the party makes headway on housing issues, public support cannot be expected to climb. Home ownership in Britain has fallen to its lowest level since 1987, settling at 63.5 per cent. The trend leaves more than 11 million private renters on the books. In a cycle that is hard to break, high rents have left many residents unable to save sufficient house deposits, contributing further to the growing housing crisis.
According to a recent report, less than half of the current generation will buy homes before reaching age 45. Among their parents, members of the baby boomer generation, the portion able to make a house purchase before turning 45 was closer to 70 per cent. Today’s high house prices keep many locked out, so unless young people inherit wealth across generations or borrow from mum and dad, their hopes of entering the housing market are delayed or worse yet, completely dashed.
Unfortunately for young Britons, today’s housing costs far eclipse those paid by their parents and grandparents. Until reforms are undertaken, conditions are likely to persist, preventing many from entering the ranks of ownership or breaking the chains of high housing costs.