THE BLOG

Home Ownership Is In Free Fall For Our Young - Unless You Can Rely On The Bank Of Mum And Dad

27/03/2017 08:07 BST | Updated 27/03/2017 09:30 BST

Owning your own home has long been regarded as a universal aspiration and helps unlock high levels of social mobility in the UK. But rates of home ownership among young people today are currently in free-fall - making it a distant dream for millions who do not have the luxury of relying on the bank of 'mum and dad' to get them a foot up on the housing ladder.

New research by the Social Mobility Commission, which I chair, has found that owning a home is increasingly out of reach for more and more young people and that trend is set to continue over the coming decade.

In the last ten years, the number of under 25-year-old home owners has more than halved. As wages have fallen, house prices have risen. Today's young generation is more reliant than ever on their parents for help to buy their first home. Those that do buy, are doing so at a later age than ever before.

Over a third of first time buyers in England (34%) now turn to family for a financial gift or loan to help them buy their home compared to one in five (20%) seven years ago. A further one in ten rely on inherited wealth. These figures are at a historic high.

It is not only first time buyers who benefit from parental support - over one in ten (12%) of existing owners are also benefitting from a gift or a loan when buying a new home.

With housing tenure remaining one of the main ways in which wealth is held and transferred through generations, difficulties in buying homes for young people are becoming a barrier to improving social mobility in the UK.

In the UK, around a third (30%) of households with dependent children currently hold assets that could be used towards a deposit for the purchase of a home. However, in respect of social mobility, only 10% of households without any formal educational qualifications over two successive generations feel able to assist their children with homeownership costs.

This gap between the housing haves and have-nots is accentuating the yawning social divide in this country which has left entire communities and whole tracts of Britain feeling left behind. Low levels of social mobility infringe Britain's implicit social contract: that those who work hard will have a fair chance to get on. This broken social contract is evident in the UK's housing market today.

People who own their own homes have average non-pension wealth of £307,000 compared to less than £20,000 for social and private tenant households. Closing that gap requires more people to get onto the housing ladder, but the reverse is happening.

Meanwhile, a hands-off approach to the private rented sector has condemned a generation of young families to growing insecurity and unaffordability.

It is welcome that the Government recognises the growing problem people face in getting on the housing ladder. But a major national effort is needed to expand opportunities for home ownership and will require more radical action on housing supply.

In our recent State of the Nation 2016 report, we warned that the Government's current target of building around 200,000 new homes is nowhere near sufficient to change the situation. We also warned that house building market is dominated by a small number of firms who have incentives to limit supply and inflate prices. In the recent Housing White Paper, there are steps to address this.

But more radical and long-term action is needed: including committing to a target of building three million new homes over the next decade, expanding the sale of public sector land for new homes and allowing house building on Green Belt Land.

Home ownership plays a crucial role in shaping future prospects. As well as being an important store of wealth, which is often passed down through generations, it provides greater control and stability than renting - particularly where short-term leases may lead to families having to move more frequently.

All of this is extremely challenging, but without it, the aspirations of working families - those treadmill families who are working hard to get on but going nowhere - cannot be realised. We risk creating a deep and permanent divide between those that have made it to their dream of home ownership and the other half of society who see little prospect of themselves or their children ever doing so.