Delivering the Prime Minister’s pledge to deal with ‘housing deficit’ is central to boosting younger generations’ living standards
The combination of falling home ownership and rising costs in the private rented sector mean that today’s millennial generation will have spent £44,000 more on rent by the time they reach 30 compared to the baby boomers, according to new analysis published today (Saturday) by the Resolution Foundation.
The analysis, published ahead of the launch of the Resolution Foundation’s flagship Intergenerational Commission on Monday, highlights an alarming drop in home ownership over recent decades that has reduced living standards for the young and led to a further concentration of wealth among the old.
The analysis shows that baby boomers – those born between 1946 and 1965 – were the main beneficiaries of the growth in home ownership over the 20th century, with close to two-thirds (63 per cent) owning their own home by the age of 30. However decades of falling housebuilding and rising house prices have reduced home ownership for subsequent generations. Around 60 per cent of generation X owned their home by the age of 30, falling to 42 per cent of today’s millennial generation.
This shift away from home ownership has left many more millennials renting privately and has coincided with a sharp increase in the cost of renting. The analysis finds that millennials spend almost twice as much on rent as genXers did at the same age, who in turn spent twice as much as the baby boomers before them.
Combining the downward shift in home ownership with the rising cost of renting, the analysis finds that millennials have spent £44,000 more on rent than the baby boomers by the time they reach 30, and £25,000 more than generation X.
The Foundation says that the extra spending on rent has reduced young people’s living standards and made it harder to save for a deposit for a house. It notes that that the extra spending on rent is more than the average deposit for a first-time buyer today of £33,000.
With half of all non-commercial or institutional rental income going to baby boomers, the Foundation says that the growth of generation rent is a key reason why questions of intergenerational fairness are rising up the national agenda.
The Foundation welcomes Theresa May’s acknowledgement of Britain’s ‘housing deficit’ in a speech earlier this week, where she said that unless action is taken “young people will find it even harder to afford their own home.”
It says that a major housebuilding programme is likely to find support across the generations, contrary to popular perception, and points to findings in the British Social Attitudes Survey that baby boomers’ support for homes being built in their local area has almost doubled in recent years, from 29 per cent in 2010 to 56 per cent in 2014.
The analysis is published ahead of the launch of the Intergenerational Commission, an 18-month investigation that seeks to repair the fractured social contract between generations. It will consider the extent to which the living standards of young people today have been permanently scarred and recommend policies to raise the living standards of current and future generations.
The Commission’s members are: Vidhya Alakeson (Power to Change), Dame Kate Barker (ex-Bank of England), Torsten Bell (Resolution Foundation), Carolyn Fairbairn (CBI), Lord Geoffrey Filkin (Centre for Ageing Better), Sir John Hills (LSE), Paul Johnson (IFS), Sarah O’Connor (Financial Times), Frances O’Grady (TUC), Ben Page (Ipsos MORI), David Willetts (Commission chair and Resolution Foundation) and Nigel Wilson (Legal & General).
Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said:
“The nation’s housing crisis is perhaps the most visible example of growing inequality between generations.
“Young people today are paying a heavy price for decades of falling home ownership. The struggle to get on the housing ladder has left many of today’s millennials renting, at a time when it has become more expensive to do so. Millennials have had to spend £44,000 more on rent by the time they reach 30 compared to the baby boomers.
“Britain’s continuing failure to build enough homes means that unless we change course the struggle of young people to own their home is only going to get worse.
“The good news is that older generations are just as concerned about young people’s struggle to own their home, and support for housebuilding is growing across all age groups. A sustained programme of housebuilding to cut Britain’s ‘housing deficit’ would send out a clear message from the incoming Prime Minister that she is committed to repairing the social contract between generations.”
Home ownership rates by age for each generation: UK, 1961-2013-14
Notes to Editors
Rental income across generations
|Mean annual rental income||Mean annual rental income among landlords||Number of Landlords||Share of all landlords by generation||Total rental income||Share of all rental income|
|Silent (and earlier)||£180||£7,200||220,000||23%||£1,560,000,000||20%|
Source: Family Resources Survey
- The millennials are aged between 15 and 35. Generation Xers are aged between 35 and 50 and the baby boomers are aged between 50 and 70.
- The Commission will be officially launched at an event with David Willetts, Frances O’Grady, Carolyn Fairbairn and Ben Page on Monday 18 July at the Skyloft in Millbank. Please contact the press office if you’d like to attend.
- In her leadership speech on Monday Theresa May said: “Unless we deal with the housing deficit, we will see house prices keep on rising. Young people will find it even harder to afford their own home. The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing instead of more productive investments that generate more economic growth.”
- Halifax Building Society estimate that the average first time buyer deposit was £33,000 in 2016.