Politicians need to be talking about solutions to the housing crisis

Published on Housing, Wealth and Debt, Intergenerational Commission

Everyone’s worried about the young. Not least because, if June’s election is anything to go by, it turns out that they do in fact vote and aren’t exactly enamoured with what it turns out 21st Century Britain has to offer them. Whatever the reason for this summer’s youth-angsting, it’s a very sensible thing to do. It’s an even better thing to do if it leads to new ideas generated, taboos binned, and change delivered. Housing should be top of the agenda for those in the generating and delivering business, because the young might like their avocado toast but they’d prefer a decent home of their own.

Low home ownership rates are the poster child for the catastrophe that has been housing policy in Britain over the past half century. Today’s millennials are only half as likely to own at the age of 30 as the baby boomers were. Four times more of them are renting privately. Many of them not only grew up living in a home their parents owned, they grew up with the assumption that the same would be on offer to them before they had children of their own. They were wrong. The average age of a first time buyer today is 30, while the average age for having a first child is 29. That’s because house price surges have meant it now takes 19 years for a typical earner to save for a deposit, compared to 3 years in the 1980s. There’s been no similar increase in the time taken to produce a child. For all the nonsense about millennials being flighty, when it comes to the security of home ownership they’d rather be a lot less footloose and fancy free.

Unfortunately it turns out that our housing disaster isn’t limited to frustrated home ownership. It’s also cost all of us a lot of money. In the 1960s we spent 6 per cent of our income on housing. Today that figure is 18 per cent, a tripling of the share of our income that goes on housing that has acted as a drag on the living standards of all of us – baby boomers included. And those figures are averages. Looking at specific generations makes the growing pressure of housing costs even starker. The silent generation (born largely pre-war) saw housing costs of a little below 10 per cent of their income during their thirties. That had risen to almost 20 per cent for the post-war baby boomers. More recent generations are paying an average of over 20 per cent of their income on housing. So it’s not just the millennials that have lost out badly – we just put up with it while people were seeing big wealth gains in exchange for rising housing cost. Now the young have realised they’ve inherited the certainty of those sky high housing costs in exchange for the possibility of inheriting some of that wealth, probably long after its much use to them. Understandably they don’t think that’s a great deal.

And while the prospect of inheritance in the distant future may reassure some, many more are making very real compromises in the here and now – living in smaller properties, further from where they work. Average floor space has fallen by 4 per cent since 1996 for people aged under 45, while it has increased by 2 per cent for those aged 45 and over.  More starkly, millennials look set to spend an extra 64 hours a year commuting to work by the age of 40 compared to baby boomers. They’d understandably like their two and a half days back.

It’s very good news that all parties are focused on the young as we head into conference season. If they want to really make a difference they should spend those conferences talking about our housing disaster and what they are going to do about it. This generation of politicians didn’t cause our housing crisis, but this generation of voters won’t forgive them if they don’t start sorting it out.

This article was originally published on Times Red Box