The proportion of young adults who need to spend more than six months’ income on a 10% deposit for the median property has increased from 33% to 78% in the last 20 years, according to the latest report released by the Institute for Fiscal Studies (IFS).
The report showed a significant fall in homeownership among young adults.
Around 35% of 25- to 34-year-olds were homeowners in 2017, down from 55% in 1997.
Since 1997, the average property price in England has risen by 173% after adjusting for inflation, and by 253% in London.
Most mortgage lenders will not lend more than 4.5 times salary
Real incomes of 25- to 34-year-olds increased by only 19%, whilst rents soared by 38%.
Most mortgage lenders will not lend more than 4.5 times salary.
In 1996, for almost all young adults, borrowing 4.5 times their salary would have been enough to cover the cost of one of the cheapest properties in their area assuming they had a 10% deposit.
By 2016, this figure had fallen to three in five across England as a whole and around one in three in London.
The report suggested that rates of homeownership amongst young adults could potentially be increased by policies to advantage young buyers over others, for example, reducing stamp duty for the former and increasing it for the latter.