Iwas 24 when I bought my first home. It was a very small flat on a main road with a train line running at the bottom of the garden – not great, but it was secure.
I bought it with my sister who worked as a ground staff member for an airline, and I was a housing officer at a housing association.
Today, if you took the equivalent incomes and cost to buy that flat we would have needed a deposit of more than £200,000, which we could not have afforded. Other options were renting privately, which wasn’t much of an option in those days as this was before the buy-to-let revolution.
We couldn’t do shared ownership as it was a real minority sport and even then renting from a housing association or a local authority wasn’t an option for those without children or a vulnerability. So we bought.
Today my daughter is nearly the same age as I was when we got the keys to our first home. We know all too well that the current generation of young adults, Generation Rent, is less likely to own a home at any age than their parents. Last month, the Institute for Fiscal Studies’ (IFS’s) briefing note ‘The decline of homeownership among young adults’ showed that home ownership among young adults has collapsed over the past 20 years – particularly for those on middle incomes.
In 1995-96, 65% of people aged 25 to 34 with incomes in the middle 20% for their age owned their own home – that was me. Twenty years later, that figure was just 27% – that’s my daughter. The key reason for the decline, the IFS research shows, is the sharp rise in house prices relative to incomes. After adjusting for inflation, the average (mean) UK house price was 152% higher in 2015-16 than 20 years earlier. By contrast, the average net family income of those aged 25 to 34 grew by only 22% in real terms over the same period.
These figures are a stark reminder of the challenges being faced by many young adults today who, through no fault of their own, are increasingly seeing the first rungs of the housing ladder being pulled further and further out of their reach.
The root of the problem, of course, is the chronic lack of housing, which has resulted in a huge demand for affordable homes both to rent and to buy. This, coupled with flat wage growth in recent years, has left thousands – especially those on middle or low incomes without access to the ‘bank of mum and dad’ – priced out of the housing market.
In London, things can be especially difficult. There, many young adults face a double whammy with the rent-to-income ratio rising, making it harder to save for a deposit – whether it’s to buy or to rent a decent, secure home.
Many experience the upheaval and cost of having to move home regularly, and all too often don’t get the chance to put down roots in their local communities.
So what can housing associations do? When I started working at one we were complementary to local authorities. We could do the bits they couldn’t. Now we do more building than most local authorities and, in some cases, developers. That means we can move in where the market fails.
We can make use of our skills and borrowing capacity to build many more homes and work with councils, government and developers to make sure as many of those homes as possible are affordable for people looking to buy or rent. But it also means we can try out new types of products and services to address today’s problems.
This means more options to rent at different rent levels, more options to buy shared ownership and more input into the market homes we build to create decent places to live in thriving communities.
If housing associations and others make maximum use of every lever at their disposal, we may just be able to give back some hope to those priced out of a place they can be proud to call home.