Twenty-somethings in the UK today are considerably less likely to own a home than their predecessors, with only about a 25% chance of homeownership for those born in the mid-1990s. This contrasts sharply with the 1990s, when twenty-somethings were almost twice as likely to be on the housing ladder.
A primary factor behind this long-term trend is that property prices have consistently outpaced incomes over many decades. The government previously estimated that England alone requires 300,000 new dwellings annually to meet population changes and household preferences, yet only 208,000 were added last year. The UK has not achieved the 300,000 new homes per year target for at least three decades.
Rising costs, including land, builders' wages, and raw materials, have contributed to this shortfall. For example, a home costing £150,000 to build in 2015 may now cost £230,000, with analysts predicting a potential 15% increase in these costs over the next five years. Supply chain issues, energy price increases, and a lack of skilled staff have further exacerbated these challenges.
However, there are indications that the situation may be improving. House prices have recently increased more slowly than wages, potentially making it easier for prospective buyers to save for a deposit. Some lenders are also offering smaller deposit requirements and larger loans with longer repayment times. Mortgage payments, relative to wages, are reportedly moving back towards the long-term average due to slower property price growth and lower interest rates compared to a few years ago.