Four in 10 young adults can't afford UK's cheapest homes even with 10% deposit, study finds

The IFS said IFS said property prices have raced ahead of incomes
Joe Giddens/PA
James Morris8 October 2018

Four in 10 young adults in England cannot afford to buy the UK's cheapest homes even if they save a 10 per cent deposit.

Research has found only 60 per cent of young adults can afford the cheapest homes in their area. The figure was 90 per cent in 1996.

And in London, the Institute for Fiscal Studies (IFS) said only a third of people with a 10 per cent deposit could borrow enough to buy one of the cheapest homes in their area. Again, the figure was 90 per cent in 1996.

The IFS said the extent to which property prices have raced ahead of incomes has made it increasingly hard to raise a deposit for a home.

A file image of a 'sold' sign in Islington. The research found only a third of Londoners with a 10 pc deposit could borrow enough to buy one of the cheapest homes in their area ( Yui Mok/PA)
Yui Mok/PA

Polly Simpson, co-author of the research, said: “Many young adults cannot borrow enough to buy a cheap home in their area, let alone an average-priced one.

“These trends have increased inequality between older and younger generations, and within the younger generation too."

The IFS argued that easing planning restrictions would increase home ownership and reduce both property prices and rents.

Jonathan Cribb, another author of the research, said: “The most economically productive and wealthiest parts of England - London and the south east - are those with the most restrictive planning constraints.

London house buyers suffer from planning constraints, the study's authors claimed (Leon Neal/Getty Images)
Getty Images

"It is unsurprising that these areas have also experienced the biggest house price increases. Increasing the responsiveness of construction to house prices is a necessary part of the solution, particularly in these areas.”

A Ministry of Housing, Communities and Local Government spokesman said: "This government is committed to helping more people get on the housing ladder and last year saw the highest number of first time buyers for over a decade.

"Through our Help to Buy scheme and the cut in stamp duty for first time buyers we are helping restore the dream of home ownership for a new generation.

"Over 1.1m properties have been built since 2010 and our targeted investment and planning reform will deliver more of the homes communities need."

Reporting by Press Association.

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