The proportion of young adults who were homeowners by their early thirties fell sharply between 1991 and 2011, with people in their early thirties three times as likely to rent in 2011 compared with 1991.
Young adults are increasingly likely to rent privately and delay buying their own homes. ‘Generation Rent’ is often used to describe this trend but a new study at the University of Cambridge and UCL indicates that this masks growing housing inequalities between young people.
Findings from a three-year study of young people’s transitions into homeownership show that the proportion of young adults who were homeowners by their early thirties fell sharply between 1991 and 2011. “Young people in their early thirties were three times as likely to live in the private rental sector in 2011 compared with 1991,” says Dr Rory Coulter.
Insecure jobs, low incomes, student debts, tighter mortgage lending and availability and affordability of housing stock all contribute to declining rates of homeownership. Yet other characteristics such as partnership status, educational attainment and labour force position are crucial to whether a young person buys a home.
Exploring the impact of young adults' family structures and backgrounds, findings show that young people aged 25-34 are more likely to become homeowners if their parents were more advantaged in the labour force or were homeowners. Where housing is more expensive, parental affluence becomes more important for the homeownership prospects of relatively advantaged young adults.
Yet neither parents nor house prices greatly affect the probability of homeownership in young adulthood when individual level characteristics (such as having a low-paid job) make owning unlikely. Even access to the Bank of Mum and Dad is not the only or paramount force in determining ownership decisions when other factors are not conducive to owning.
“There are lots of different pressures and trends affecting young people’s housing,” says Dr Coulter. “Increasing the supply of houses is not suddenly going to lift rates of young adult homeownership back to their peak of 30 years ago.
Rather, the study indicates that policymakers must pay urgent attention to improving the security and affordability of rented housing where most young people live. At present, the Ministry of Housing, Communities and Local Government is consulting into increasing the security of private sector tenants by extending contracts from one to three years. “In the short term, improving affordability and security of tenure, particularly for the disproportionate number of disadvantaged young families who are being pushed into private renting, as well as improving access to social housing, is where attention should focus,” he says.