Homeownership Rates By Birth Year And Age

[Dorkins]

Ed Conway‏@EdConwaySky[/indent]

Striking IFS chart showing how much less likely todays younger generations are to get on the housing ladder

It looks like the first cohort to start the downward tumble were born in about 1975. They would have been 18 in 1993, 21 in 1996, and 25 in 2000. Basically the start of the collapse in home ownership coincides perfectly with houses suddenly being very expensive at the time this cohort were old enough to buy. No need to blame iPods or the fecklessness of today's youth.

Edited July 15, 2014 by Dorkins

[The Knimbies who say No]

wot ladder, Ed?

[The Knimbies who say No]

I ought to say that it is a very revealing chart, despite my flippant response. It deserves discussion. Home ownership rates for 25 year olds have halved in two decades.

[Bradbury Robinson]

So whilst the oldest three all seem to top out at about 70% ownership the next generation (where I sit!) seems to be about 60% then the other two look to project to roughly 45-50% and 35-40% respectively.

[R K]

It's probably a combination of factors:

1. House prices to wages

Compared with 1996, a higher percentage of young adults lived with their parents at each age between 20 and 34 in 2013. The increase in the number of young adults living with parents coincides with an increase in the ratio of house prices paid by first time buyers to their incomes, which has risen from 2.7 to 4.4⁷ over the same period. This may have reduced the ability of young adults to leave the parental home. Indeed, housing affordability is often cited as a key reason for young adults to continue living in their parental home8

http://www.ons.gov.uk/ons/rel/family-demography/young-adults-living-with-parents/2013/sty-young-adults.html

2. Doubling of university graduates (pushing back the date entering work force) during the same period. 17% in 1992 to 38% in 2012

http://www.ons.gov.uk/ons/dcp171776_337841.pdf

3. Globalisation impact on job security, wages.

4. Mobility. Lower % ownership = increase in job mobility.

There's an implicit assumption in the OP that higher rates of ownership are desirable. They may not be. Lower OO may in part reflect social changes towards a desire for increased mobility. e.g. Do 20-30s even want to be shackled to a mortgage when they have more opportunities to travel or work abroad comparared to boomers who might have started work at 16-18, got married early 20s, bought a house in their home town and worked most of the life for a local company.

[porca misèria]

It looks like the first cohort to start the downward tumble were born in about 1975. They would have been 18 in 1993, 21 in 1996, and 25 in 2000. Basically the start of the collapse in home ownership coincides perfectly with houses suddenly being very expensive at the time this cohort were old enough to buy. No need to blame iPods or the fecklessness of today's youth.

Actually if you look more carefully at the same cohort, you'll see home ownership for them is falling even around age 22 in the '90s, when house prices are low and affordability at an all-time high. Why should that be?

Perhaps it could be the coming of the shorthold? These are the generation for whom renting in the open market has become a reasonable option. The desperation to escape that hell has receded, as renting no longer implies a slum with a gangster in charge for anyone who can't get somewhere "on the grapevine".

[renting til I die]

Interest chart and makes me feel a bit sick that I was born in the mid 70's! If only I hadn't gone to uni and gotten myself a job earlier to became mortgage slave! I too could be on here saying that HPI was good for all.

Interesting point by RK, although with rents as high, if not higher than current mortgage costs (not to mention all of the hoops you have to jump through with letting agents now), I don't think that lower ownership is increasing mobility as much as you might think.

[R K]

Interest chart and makes me feel a bit sick that I was born in the mid 70's! If only I hadn't gone to uni and gotten myself a job earlier to became mortgage slave! I too could be on here saying that HPI was good for all.

Interesting point by RK, although with rents as high, if not higher than current mortgage costs (not to mention all of the hoops you have to jump through with letting agents now), I don't think that lower ownership is increasing mobility as much as you might think.

It was probably a question.

I'd agree that we need far more, better quality, professionally managed rentals though with vastly improved tenants rights.

There's some interesting points from Dorling on the increase in women going to Uni over the same time period on the recent baby boom in the Economist today

http://www.economist.com/blogs/blighty/2014/07/britains-birth-rate?fsrc=scn/tw_ec/end_of_the_baby_boom_

What is to account for this? The ONS suggests a couple of explanations, but most are purely speculative: Welfare benefits for families have got stingier and some have been restricted; that might have put off some women at the margin; employment has become less stable and less well-paid. Both are sort of plausible. Another explanation is the housing market. Given the rising cost of housing and the plummeting home-ownership rate among those under the age of 35, it is surprising that anyone feels they can afford to have a child. Possibly that is now outweighing other factors.

Yet one other explanation is simply that the baby boom was never all that to begin with. Danny Dorling, a geography at the University of Oxford, has suggested that a large part of the increase in births in the 2000s was simply a result of women delaying having children in the 1990s and early 2000s. This in turn was the result of the dramatic increase in the number of people going to university in the early 1990s. Graduates, understandably, wait longer to have children than non-graduates, and so as more women in the 20s in the 1990s got degrees, they stopped having children.

Edited July 16, 2014 by R K

[byron78]

Interesting point by RK, although with rents as high, if not higher than current mortgage costs (not to mention all of the hoops you have to jump through with letting agents now), I don't think that lower ownership is increasing mobility as much as you might think.

Yep... mortgages can be cheaper than renting (not where I am mind), but there are an awful lot of fees and hassle involved with owning.

Sure... renting comes with a lot of fees as well, but I'd guess moving house when you own is about 20K worth at the very least.

I own but also rent so I'm in the odd situation of doing both.

Rent simply because the business I run comes with a huge flat above a shop that costs bugger all to take as well (I have a decent landlady who hasn't put her rents up for 15 years). Was very glad I rented when the roof went a few years ago (30K), the windows needed doing 5 years ago (7K) and the drains under the road outside needed doing 7 years ago (3K).

One thing that never gets talked about - when house prices go up, so do maintaince fees. You seem to get charged in relation to what your asset is "worth" as much as anything else.

Saying all that, the place I own is new build and has cost me F all in terms of maintaince so it's swings and roundabouts (rented to family cheaply at the mo because I'm lovely).

Edited July 16, 2014 by byron78

[Fishfinger]

It's probably a combination of factors:

1. House prices to wages

http://www.ons.gov.uk/ons/rel/family-demography/young-adults-living-with-parents/2013/sty-young-adults.html

2. Doubling of university graduates (pushing back the date entering work force) during the same period. 17% in 1992 to 38% in 2012

http://www.ons.gov.uk/ons/dcp171776_337841.pdf

3. Globalisation impact on job security, wages.

4. Mobility. Lower % ownership = increase in job mobility.

There's an implicit assumption in the OP that higher rates of ownership are desirable. They may not be. Lower OO may in part reflect social changes towards a desire for increased mobility. e.g. Do 20-30s even want to be shackled to a mortgage when they have more opportunities to travel or work abroad comparared to boomers who might have started work at 16-18, got married early 20s, bought a house in their home town and worked most of the life for a local company.

Also a fighting retreat against the silicon chip. Have been doing that for 30 years now and every upgraded system I use a whole lot of jobs disappear...

[fluffy666]

It looks like the first cohort to start the downward tumble were born in about 1975. They would have been 18 in 1993, 21 in 1996, and 25 in 2000. Basically the start of the collapse in home ownership coincides perfectly with houses suddenly being very expensive at the time this cohort were old enough to buy. No need to blame iPods or the fecklessness of today's youth.

As a child of 1973, I can see this.. bought literally months before houses took off in my area.

[Dorkins]

There's an implicit assumption in the OP that higher rates of ownership are desirable. They may not be. Lower OO may in part reflect social changes towards a desire for increased mobility. e.g. Do 20-30s even want to be shackled to a mortgage when they have more opportunities to travel or work abroad comparared to boomers who might have started work at 16-18, got married early 20s, bought a house in their home town and worked most of the life for a local company.

Do you know many 20-30somethings? I'm from this age group and I'd say >95% of the ones I know are verging on desperation to buy. They are definitely not thinking "Ah well, I'll see a bit of the world first, think about settling down later." With 30 year mortgages, -£40k student debts and +£40k deposits required they don't think they have that luxury.

Those articles you see about the current generation of young adults being highly conscientious about exam results, careers and money are pretty close to the mark in my experience. They think if they put a foot wrong now they won't get the chance to recover later.

[The Knimbies who say No]

In personal experience, the numerous people I've heard suggesting that "perhaps buying isn't for everyone" (as if it ever was) have been comfortably housed themselves and scarcely aware of the vagaries of the PRS. It's always sounded like cognitive dissonance to me.

[Bland Unsight]

Actually if you look more carefully at the same cohort, you'll see home ownership for them is falling even around age 22 in the '90s, when house prices are low and affordability at an all-time high. Why should that be?

Perhaps it could be the coming of the shorthold? These are the generation for whom renting in the open market has become a reasonable option. The desperation to escape that hell has receded, as renting no longer implies a slum with a gangster in charge for anyone who can't get somewhere "on the grapevine".

There was also a decent spike in youth unemployment (which would capture the under-25s) round about this time

Source: http://www.xperthr.co.uk/blogs/pay-intelligence/2011/02/youth-unemployment-a-closer-look-at-the-figures/

[i can't speak to the quality of the source, but this chimes what I thought was the case]

[Habeas Domus]

If you read across the 50% line you can see that it goes from 50% having bought at age 26, up to age 33 and continuing - a big chunk of the next generations won't be buying anything while they are still of child bearing age

[Bland Unsight]

...

There's an implicit assumption in the OP that higher rates of ownership are desirable. They may not be. Lower OO may in part reflect social changes towards a desire for increased mobility. e.g. Do 20-30s even want to be shackled to a mortgage when they have more opportunities to travel or work abroad comparared to boomers who might have started work at 16-18, got married early 20s, bought a house in their home town and worked most of the life for a local company.

Highly contentious. Perfectly reasonable to argue that delayed household formation is caused by debt fuelled house price inflation. Also the idea that there is a desire for increased mobility sufficient to explain even a modest part of such a monumental transformation is pure moonshine. As best I understand my social history, people have no desire for mobility in and of itself. Mobility is prompted by the economic requirement to work. People follow the jobs. If you are suggesting that economic reality has required mobility, then that's what you should have said. Certainly the concentration of well paid work in the South East is a linkage in the whole ungodly mess, but that's not the same as suggesting that people stopped buying houses because they desired mobility.

[cybernoid]

Do you know many 20-30somethings? I'm from this age group and I'd say >95% of the ones I know are verging on desperation to buy.

Quite. Ive heard this tail wagging the dog thinking in the media as well. Next we'll be hearing that those who starve to death just cant be very hungry, otherwise they'd eat something.

[porca misèria]

There was also a decent spike in youth unemployment (which would capture the under-25s) round about this time

The graph you posted shows that peak a good five years earlier. The recession at the beginning of the '90s.

[Bland Unsight]

The graph you posted shows that peak a good five years earlier. The recession at the beginning of the '90s.

Blah, blah. Lazy opinionated poster (you) argues the toss lazily. Same old same old. You were responding to a post about which identified a 1975 cohort, you said "you'll see home ownership for them is falling even around age 22 in the '90s" - which puts us in 1997. When were these people supposed to be saving up their deposits? Oh, that will be the early 1990s - a period of high youth unemployment that follows in the wake of the... the 1988 Housing Act that brings in the AST.

If you want to keep unpacking it, you can add in the increase in the ratios of people entering work or going to university and the fact that student loans are introduced and replace grants so that graduates leave with debt. I'll buy the idea that the expansion of tertiary education was a massive YTS scheme, and that the genius of the Student Loans Company was to get the YTS boys and girls to (partially) finance their own YTS scheme with debt.

The Ponzi is old and its roots are there for anyone to see.

You see, I wasn't disagreeing with you. I was indicating how the effect of the introduction of the AST was compounded by other factors - to which you might add the collapse of UK manufacturing and the new reliance of the UK economy on the service sector in the South East, and I was correctly including in my back-of-a-cigarette-packet analysis the fact that deposits need to be saved. I don't recall too much talk of BOMAD in 1997.

You can thank me later.

[Bland Unsight]

The graph you posted shows that peak a good five years earlier. The recession at the beginning of the '90s.

ME KNOW ALL LONG WORDS AND CAL-CU-LUS BUT ME DON'T KNOW HOW TO READ LINEAR SCALE TO GET ABSCISSA. ME THANK PORCA - HE REAL KIND AND THOUGHTFUL. THANK YOU PORCA! I LOVE YOU PORCA. I mean really...

[Dorkins]

If you read across the 50% line you can see that it goes from 50% having bought at age 26, up to age 33 and continuing - a big chunk of the next generations won't be buying anything while they are still of child bearing age

Yes, my girlfriend and I (both 1983-7 cohort) also spotted the fact that 50% home ownership by 26 used to be the norm. We were both a bit stunned by the contrast with the situation now in which most of the people we know are 30something renters. I think the older "it's your own fault for buying iPods and branded clothing" brigade haven't figured out that the hedonistic 18-25 year olds they despise are totally out of the game and that the moaning wannabe FTBers are mostly dull worker bees in their late 20s-30s who may well have been in full time employment for 10+ years.

Edited July 17, 2014 by Dorkins

[Billy soy]

Do you know who also thinks younger generations are not buying because they want mobility and flexibility? Kirstie allsop.

Everybody I know in their 20's and 30's aspires to own their own home, so they may start a family, have secure accommodation in their old age or even just to get on the ladder their parents keep on insisting exists.

The largest barrier they have to entering the housing market are the current historically high prices.

Housing was cheaper for older generations in the years when you could only borrow 3.5 times your wage.

The older generations were perfectly placed in a Goldilocks zone to borrow more in the credit binge against housing which was still cheap.

Younger cohorts only have htb and low interest rates going for them. Even BTL has an easier ride and the average age of BTL'er is 51.

[winkie]

As long as the buy to letters continue to buy up, or fail to sell first time buyer property meaning that what would have been a 1st time buyer are now first or second time renters......one way around it is saving well, finding the right landlord and skipping a rung or two....could well work out to be the better move.

[hellsbells]

Also buried in the news yesterday was the ONS reporting that birth rate has just had its biggest single year fall since 1975. The original story from yesterday has gone but is mentioned in:

http://www.bbc.co.uk/news/health-28329737

The possible reasons place job insecurity and housing factors well down on the list. They really are determined to keep their heads in the sand.

[Mrs Bear]

I would be interested to see a graph that compares home ownership in these age groups by location. Even taking into account relative wage levels, housing has long been a good deal more affordable in some areas than others.

Young relatives in Stockport and the Bolton area have been comfortably able to buy houses that our two (in Kingston) could not even think of at the same age, and with the same sort of money coming in.

My nephew and his wife, both 40, married soon after uni and bought their first house (in a relatively cheap area up north) and had kids relatively young. They now have a 4 bed house paid off.

Though I will admit that neither of our two had any thoughts of either buying or 'settling down' at the same sort of age.