The young will be life long residents with parents

Jul 22, 2013 by

By 2020 lack of investment in new homes will see prices rise by 42 per cent

A generation of so-called ‘Millennium baby boomers’ looking to buy their first property face a housing timebomb with prices expected to rise  by more than 40 per cent in the next seven years.

An increase in births combined with years of failure to build enough homes means that there will be ‘colossal strain’ on the housing market, a report warns today.

Millions of young people will be struggling with rising house prices and costs of rent, which will leave 3.7million under-35s forced to live with their parents.

Locked out: By 2020, the average first-time buyers¿ property will cost £245,165 – out of the reach of many

The housing crisis will deepen because of a boom in the post-2000 birth rate, according to a report by the National Housing Federation. Between 2001 and 2011, there were 6.9million births – a 22 per cent rise on the previous decade. But only 1.6million new homes were built during this period.

The NHF’s campaigns director, Ruth Davison, said this gap would put even more pressure on housing supply than the 1980s baby boom, when birth rates went up 13 per cent.




This generation, now in their late 20s and early 30s, are struggling to get on the property ladder even with a decent job. By 2020, the continuing lack of investment in new homes will see house prices rise by 42 per cent and private rentals by 46 per cent, the report says.

Miss Davison said: ‘Rather than learn from past mistakes, the country is still not building enough homes to tackle the problem.

‘The situation will be even worse for the Millennium children. Seven years from now the eldest will be young adults, looking for work, seeking independence and dreaming of living in their own homes.

‘To solve this housing crisis, we need to build more of the right homes, at the right prices, in the right places. The future of the country – and our young people – depends on it.’

House keyring and mortgage leaflet

Property squeeze: An increase in births and failure to build enough homes means that there will be ‘colossal strain’ on the housing market

Over the past few decades, house prices have far outpaced average earnings and the report suggests this will continue, locking millions of young would-be buyers out of the housing market.

In 2012, the average price of a first home was £173,185 – nearly ten times the average wage of someone aged 22 to 29. By 2020, the average first-time buyers’ property will cost £245,165 – a 42 per cent hike, according to financial analysis the NHF commissioned from the Oxford Economics group.

Even given the expected increase in wages of 36 per cent, low-earning young people would need to spend 16 times their salary to get on the ladder.

The number of young people owning their own property is expected to drop by over one million in the next seven years as a result.

Couple looking into an estate agents window

Headache: Couples looking to move in together could find it increasingly difficult in future

And this will leave them even more strapped for cash, as private rentals are increasing at an even faster rate than house prices.

There are currently three million adults aged 20 to 34 living with their parents and in the next seven years another 700,000 will join their ranks, the report predicts.

The authors say being unable to move out ‘means young people do not experience and learn from the challenge of independent living’.

As well as putting pressure on their jobs and relationships, the report, Housing Britain’s Future, says the whole country will suffer.

Miss Davison said: ‘If we expect this generation to take over the reins and drive the country forward in an increasingly competitive global economy, we must provide them with the foundations for a bright, stable future.’

The Government has commissioned a review of the private rental sector, and the Chancellor recently announced a £1billion scheme to help first-time buyers with their deposit – although analysts warn a return to 95 per cent mortgages will further inflate prices.

via Nearly four million under-35s will be forced to live with their parents as 40 per cent house price rise by 2020 spells misery for young buyers | Mail Online.

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