A new report has highlighted that those people born in 1980’s are much worse off financially than those people born a decade earlier.2
According to the report by the IFS, Institute of Fiscale Studies, people who were born in the 70’s would have an average accumulative household wealth of £53,000 per adult with those born in the 80’s having wealth of £27,000.The study attributes this to the high cost of renting and the decline of the generous company pension schemes. The report also added that people who were born in the 70’s were worse off than those born in the 60’s. People born in the early 1980’s now spend 28% of their income on rent, compared to those homeowners who spend around 15%. 2
The IFS stated that people in their 30’s, at least 55% who were born in 1950s 1960s and 1970s had been able to purchase their first property, where as today this figure has dropped by 40% for those people born in the 1980s.1
Andrew Hood, an author of the report and an IFS research economist, said: “Sharp falls in home-ownership rates and in access to generous company pension schemes, alongside historically low interest rates, will make it much harder for today’s young adults to build up wealth in future than it was for previous generations.”
In another report issued by London School of Economics highlighted that would-be buyers are still not able to buy their own home, because wages have lagged behind increasing property prices: “Greater down-payment requirements hinder housing purchases by young households with less wealth. In turn, older and wealthier households become ‘accidental landlords’ who keep their previous home and rent it out when moving up the housing ladder.
“The fact that these entry-level houses are rented instead of being sold is what drives the change in the composition of transactions: sales of lower quality houses make up a smaller fraction of the total when down-payment requirements increase.”
If you are a first time buyer looking to get onto the property ladder and would like to discuss your options why not pop into your local branch of Intercounty for a chat and a coffee or call our team on 01279 655248.
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