Theresa May could be entirely correct. Britain’s real estate market is severely dysfunctional and needs to be reformed. Homeownership for millennials has collapsed over the past three decades; the investigation reveals that millennials are facing a housing crisis from London to Manchester.
The homeownership rate for millennials aged 25- to 34-year-old has nearly halved in some regions of Britain, showing that the housing affordability crisis extends far beyond the boundaries of London.
According to The Guardian, the report was conducted over a two-year investigation of “intergenerational fairness in Britain,” supervised by think tank Resolution Foundation and directed by former universities minister David Willetts. The team discovered that overpriced homes in Britain had forced millennials into “increasingly cramped and expensive rented properties that leave them with a longer commute and little chance of saving for a home.”
The figures below show how a collapsing homeownership rate for millennials is much more widespread than thought:
“Ownership among 25- to 34-year-olds has plummeted in Greater Manchester from 53% in 1984 to 26% last year. It has fallen from 54% to 25% in south Yorkshire, from 45% to 20% in the West Midlands, from 50% to 28% in Wales and from 55% to 27% in the south-east. In outer London, the proportion has collapsed from 53% to just 16%. Out of 22 regions analysed by the commission, in only one – Strathclyde in Scotland – has home ownership among the young remained stable. It stood at 32% in 1984 and 33% last year, having peaked at 45% in 2002.”
Shockingly, with today’s sub-par economic growth conditions in the region, millennials are expected to be at the same level of homeownership as the previous generation by the age of 45. The Guardian notes that inheritances could speed up the home buying process, but added that “nearly half of young non-homeowners have parents who do not own either.”
Nearly two-fifths of millennials rent by the age of 30, double the rate for Generation X, and almost four times the rate for baby boomers. It was estimated that millennials spend roughly a quarter of their net income on housing, which is three times more than the pre-war generation.
The Guardian explains how millennials are facing smaller living spaces with longer commutes to their jobs.
“Their living space is also declining. Each person living in the private rented sector now has on average eight square metres less space than they did in 1996. Meanwhile, those who own their own homes enjoy an extra four square metres each. Since younger households are more likely to be private renters than owners, they now have less space on average per household member. Just under one in 10 households headed by millennials in their late 20s now live in overcrowded conditions.
They are facing longer commutes than older generations endured. If current differences continue, millennials will spend almost three full days more commuting in the year they turn 40 than the baby boomers did at the same age.”
Based on existing trends from 2002 to 2012, about half of the oldest millennials would own a home by the age of 45, compared to more than 70 percent of baby boomers at that age.
Torsten Bell, director of the Resolution Foundation, said: “The need to renew our intergenerational contract is clear and urgent, but doing so is far from easy. It requires new thinking and tough trade-offs – from how we deal with the fiscal pressures of an aging society in a way that is generationally fair, to how we deliver the housing young people need while respecting the communities everyone values.”
“We need our political leaders to rise to this challenge with an appeal to all generations. We can deliver the health and care older generations deserve without simply asking younger workers to bear all the costs. We can do more to promote education and skills, especially for those who are not on the university route.
We can provide more security for young people, from the jobs they do to the homes they rent. And we can show younger generations that owning a home is a reality, not a distant prospect in 21st-century Britain.”
At the current rate, a majority of millennials in Britain might not be able to afford a home in their lifetime. While this is nothing new, the homeownership rate has been declining for the past 30-years, at what point will the millennials revolt against government and demand inter-generational fairness?