Find a job, marry, start a family, buy a home – even after rapid social and technological changes of the past century, traditional rites of passage have largely persisted to this day.
But if you’re under 40, one of these milestones will almost surely be out of reach – your chances of ever owning a home in the UK have become increasingly slim.
Accountancy firm PwC found that as house prices continue to rise by five per cent a year, coupled with a severe shortage of affordable homes, renting privately will be the norm for those under 40 over the next decade.
The number of private tenants has skyrocketed over the past 15 years – in 2001, little more than 2m people rented privately, which has doubled to more than 5m today. The PwC report estimates that “Generation Rent” will continue to multiply, with more than 7m renting privately by 2025.
Homeownership has become all but an impossibility as rising house prices – the average asking price for a house in England and Wales now stands at £294,542 – mean hefty deposits, now averaging £30,000 for first-time buyers.
The housing charity Shelter found that young families across many parts of the UK would have to save for more than a decade to put down a deposit for a home. Single people in London would have to save for almost 30 years, meaning you’d have to start saving before you even finish university if you want any hope of living in your own home before your 50th birthday.
Saving is certainly easier if you’ve got financial help from families – Lloyd’s Bank estimated that parents and grandparents are spending almost £10bn a year helping their adult children pay deposits on their homes.
But for many young adults earning an average wage of less than £25,000, with relatives earning not much more, the private rental sector is the only option – and one that’s becoming just as alarmingly unaffordable as owning a home.
Average rent prices in London have peaked at just under £1500 per month, with rents going up throughout the rest of the country as well. Those living in North East, where average rents have traditionally been lowest, must now pay a monthly average of more than £500 a month – a 5 per cent increase from last year.
The Chartered Institute of Housing pointed to the long-term effect of an entire generation not being able to escape the vicious high-rent cycle. With rents being so high that it becomes impossible to save for a house, in 35 years’ time, a third of people over 60 will still be renting.
“Should homeowners need it, they can release the equity to fund their retirement or top up their income,” a pensions firm managing director told the Guardian. “It was once a given that by the time people retired many would own their own home. However, as levels of home ownership tail off, more and more people do not have the luxury of a property safety net.”
Unite assistant general secretary Steve Turner said that the PwC’s report is only the latest in a raft of evidence pointing to a housing meltdown that requires immediate government intervention to resolve.
“This report is only one of many indicators that the housing crisis is reaching breaking point – and something must be done about it, not in a few years’ time, but now,” he said.
“A serious housebuilding programme is absolutely essential. This will bring down extortionate prices and give hardworking young people, many of whom have entered the job market at a time of stagnating wages, a chance to get on the property ladder.
“More than this, it will be a boon to the wider economy – for every £1 spent on construction, more than £2 is generated in the economy as a whole, which represents one of the highest rates of return,” he added.
Turner turned his ire to the private rental sector, which he condemned as unsustainable if left to its own devices.
“This must be regulated so that the millions of tenants who are at the mercy of profit-hungry, unscrupulous landlords are given stability and peace of mind. We must end the use of housing as an investment and introduce rent controls alongside landlord registration and new guaranteed tenant security rights.
“Housing is a right for all regardless of your life circumstances, not a luxury for the few who’ve been lucky enough to be born wealthy.”