Youth home ownership rates have been steadily increasing since the mid-2010s, offering a glimmer of hope for younger generations often labelled as part of ‘Generation Rent.’ According to a new report by the Resolution Foundation, the housing crisis that has long plagued young people in Britain may finally be easing. This marks a significant turning point in a narrative that has typically emphasised the difficulties faced by younger generations in getting onto the property ladder.
The report highlights a noticeable improvement in home ownership rates among younger millennials, particularly those born between 1991 and 1995. These individuals are now slightly more likely to be homeowners by the age of 25, with 14 per cent achieving this milestone. In comparison, just 13 per cent of those born a decade earlier, between 1981 and 1985, owned a home at the same age. While the percentage difference may seem small, it reflects an encouraging trend, especially given the long-standing challenges posed by high property prices and stagnant wages.
The findings suggest that younger millennials are beginning to make modest yet meaningful gains in home ownership, signalling that the housing landscape for young people could be improving. Factors such as changing economic conditions, government policies aimed at first-time buyers, and shifts in housing market dynamics may be contributing to this upward trend.
Although this progress offers some reassurance, challenges remain for many young people seeking to enter the housing market. With property prices still high and wage growth uneven, the journey to home ownership is far from straightforward. However, the upward trajectory observed in this report suggests that younger millennials are beginning to find opportunities that may not have been as accessible to their older counterparts.
The report also highlights a positive trend regarding the share of income that young people, aged 25 to 34, are spending on housing. This has been decreasing over time, from 27 per cent in 2015-16 to 22 per cent in 2022-23. This reduction suggests that, on average, younger generations are feeling less of a financial burden when it comes to housing costs. The decline in housing expenditure is a reflection of various factors, including changing market conditions, government interventions, and more affordable rental options in some areas.
However, the Foundation notes that housing stress, defined as spending over 30 per cent of income on housing, remains a significant issue, particularly for poorer households and young people living in London. Across the UK, around one-in-four young people (24 per cent) experience housing stress, which indicates a sizeable portion of the younger population still struggling with affordability.
The situation is even more concerning for low-income families and those residing in London, where housing stress is much more prevalent. More than half (53 per cent) of low-income families report spending a significant portion of their income on housing, and 43 per cent of young people living in London face similar financial strains.
While improvements in home ownership rates have been noted, these have primarily benefited middle-income and wealthier households, rather than those on lower incomes. The Foundation’s analysis suggests that while some young people are finding more opportunities to purchase homes, others are still grappling with the affordability challenges that persist, especially in high-demand areas like London. This disparity highlights the ongoing struggles for many in the younger generation, despite overall improvements in home ownership rates.
Since 2015-16, homeownership rates have seen notable increases among 25–34-year-olds in the UK, particularly in higher income groups. Those in the middle third of the income distribution have seen a 9 percentage point rise, reaching 30 per cent, while the top third saw a 6 percentage point increase, reaching 52 per cent. In contrast, homeownership rates for the lowest third have only risen by 3 percentage points, reaching just 13 per cent. This widening disparity highlights that better-off young millennials are now four times more likely to own their own home compared to their lower-income counterparts, with the gap increasing from 36 to 39 percentage points.
Despite these recent improvements in homeownership rates, young people today remain significantly less likely to own their home compared to previous generations. In 2022-23, only 31 per cent of young people were homeowners, a sharp decline from a peak of 55 per cent in 1990. Over the same period, the number of young people renting in the private sector has risen from 10 per cent to 33 per cent, and the proportion living with their parents has increased from 16 per cent to 22 per cent.
The Foundation also notes that young people from poorer backgrounds are far more likely to continue living with their parents compared to those from wealthier families. Around 35 per cent of young people from lower-income households live with their parents, compared to just 10 per cent of those from richer families.
Furthermore, those in the private rented sector face higher housing costs, spending an average of 31 per cent of their income on rent, compared to just 12 per cent for those with a mortgage (excluding principal repayments) and 5 per cent for outright homeowners. This stark contrast in housing costs highlights the financial strain on those renting privately.
The Foundation calls on the new Government to build on the positive momentum seen in homeownership rates among young people by meeting its ambitious housing targets. However, it stresses the need to address the challenges faced by poorer families, who are still struggling to access affordable homeownership opportunities.
Molly Broome, an economist at the Resolution Foundation, comments: “After decades of declining youth homeownership, Britain has finally turned a corner. The share of young homeowners has been growing consistently since the mid-2010s. However, the recovery has largely bypassed poorer young people, and as a result, the property divide among young millennials has grown wider.”
She adds that while housing costs have been decreasing recently, the scale of the housing crisis remains significant. This has left housing stress still prevalent among young people, particularly those from poorer families, as well as those living in London and renting privately.
“There is still a long way to go before Britain can truly claim to have tackled its housing crisis,” she continues. “The Government must ensure that efforts to improve the housing outlook for young people do not leave the most disadvantaged behind.”
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