19/02/2018
Karen Woods
Figures released by the Institute of Fiscal Studies has revealed an alarming decline in the number of middle earners who are able to get on the property ladder.
Over the last 20 years, the amount of 25–34 year olds with middle incomes – those defined as having a take home pay of £22,200 to £30,600 – have dropped considerably. In 1995-96, 65% of this group owned a home, but this has fallen to just 27% in 2015-16.
Predictably, increases in property prices across the South East resulted in the largest fall of home ownership amongst 25–34 year olds (64% to 32%), however, every region of Britain has seen a 10% fall over the same period.
A key reason behind the findings is that wages have failed to keep up with the sharp rise in house prices. Allowing for inflation, in 2015–16 the average cost of a house in Great Britain was 152% higher than in 1995-96. In comparison, real net family incomes of those aged 25–34 only grew by 22%.
Defending the government’s position, Housing Minister, Dominic Raab said that schemes such as Help to Buy and the removal of stamp duty for most first-time buyers had assisted people in purchasing their first home. Many argue, however, that while the government is pulling out the stops to help people get on the property, little is being done for ‘second steppers’ who are unable to trade up to larger properties, making it difficult for growing families.
Please note that this article is meant as general guidance and not intended as legal or professional advice. Updates to the law may have changed since this article was published.