According to research from Hometrack, the housing market analytics business, it is now necessary to have an income of £53,000, as a first time buyer, to purchase a home in any UK city. That’s an increase of almost one fifth in only the last three years and this trend shows no signs of changing. On the contrary, all the evidence is that things could become even worse for hard pressed young people trying to secure their first home, as house price growth is way ahead of earnings, and there is no sign of that changing so substantially that it would tilt the balance the other way.
An unsustainable situation?
Hometrack’s survey shows that average house prices across the top twenty UK cities have risen by 14.5%, while during the same period, average wages have risen by 7.5%, according to the latest figures from the Office of National Statistics. You do not have to be a Maths prodigy to see what the inevitable conclusion of that unbridgeable gap between house prices and earnings is, and see that we have a huge problem, with devastating social, economic and personal consequences. If young adults cannot get on to the housing ladder, what should they do, and should we have perhaps explained to them how the housing market works when they were at school?
Finding and being able to afford somewhere to live, is not a discretionary option. Unless you fancy a life-time of couch surfing or a period of rough sleeping, you need to be able to pay for your housing costs, and as they are rising, while wages are not keeping pace, you may face a serious problem. Too many young people are now having to fork out a massive slice of their post tax income to pay their rent – especially in London and the big cities – as rents have also risen sharply because landlords are sitting comfortably in a strong sellers market, because people who cannot get mortgages have two choices: rent, or return to live with mum and dad.
How do we solve the housing problem?
It is often said that we have an obsession with home ownership in the UK, and that our attitude to home ownership needs to change so that other types of housing arrangements are seen as equally valid choices. That may be true, but until we can find a way of offering our young people access to stable and affordable housing choices, the problem will grow, and get worse.
Families having to subsidise their (often) graduate offspring just to be able to pay the rent is not a recipe for social cohesion, never mind economic advancement. Someday soon, someone will realise that these problems are intergenerational, with a huge, but as yet, pretty disguised impact, which is robbing too many young people of having any chance of getting a home of their own, while simultaneously forcing the bank of mum and dad to come in and bridge the gap, affecting the choices that parents need to make about their own futures.
It is unsustainable, and we need to have a national conversation about how we tackle this egregious problem.