The “Home Affront ‘ report by the Resolution Foundation shows that each generation since the war has had to spend more of their income on housing. The pre-war ‘silent generation’ (1926-1945) spent just 7 per cent of their income on housing at the age of 30. This figure more than doubled for the baby boomers (1946-1965), who spent 17 per cent of their income on housing at that age. And it has reached a record high for millennials today (1981-2000) who currently spend almost a quarter of their income on housing (23 per cent) at age 30.
While housing costs have escalated, the baby boomer generation has been the biggest beneficiaries of improvements in the security and quality of housing that have taken place over this time as home ownership spread.
Those born in the late 1940s have enjoyed the highest ownership rates over the course of their lives, with each five-year cohort after them doing worse than their predecessors. Home ownership rates among young families born in the early 1980s are now around half that of those born 30 years earlier at the same age.
The Foundation notes that while housing has been a growing drag on living standards for everyone, increased home ownership has boosted the wealth of older generations, as well as their income in later life as a record proportion now own their homes outright.
In contrast, younger generations are being rewarded for the record amount they have to spend on housing with lower home ownership, greater insecurity and smaller homes that are further from where they work.
The report shows that there are now as many young families (aged 25-34) living in the private rented sector (PRS) as owning a home or living in the social rented sector combined (36 per cent).
It also finds that average floor space has fallen by 4 per cent since 1996 years for people aged under 45, while it has increased by 2 per cent for those aged 45 and over. Young people today are also compromising on location, with millennials set to spend an extra 64 hours a year commuting to work by the age of 40 compared to baby boomers.
Home Affront warns that while the passing of the financial crisis means some young households will be able to become homeowners, the outlook for younger generations is on course to continue deteriorating.
Even in an optimistic scenario in which homeownership for young people ‘catches up’ with the generation before them, the age at which most families will own their own home could be delayed until their 40s – a decade later than when most baby boomers got onto the housing ladder.
Such a delay would mean many more first-time parents living in private rented accommodation, where 2-month eviction notice periods are the norm, and facing the daunting prospect of having to save for a deposit while facing childcare costs.
The Foundation is calling on all political parties to make addressing Britain’s housing crisis a central feature of their domestic policy agenda as it is a big part of the answer to ensuring that each generation continues to do better than the one before them. Bold policy action should include boosting housing supply and reforming the PRS so that it offers the quality and security that families need.
Lindsay Judge, Senior Policy Analyst at the Resolution Foundation, said: “The shock election results of the last 15 months have shown that significant discontent exists about the direction that Britain is heading and housing is huge a part of this anxiety. Across the generations, many are worried about why today’s young adults have it so hard when finding a secure place to live.
“Britain’s housing catastrophe has been 50 years in the making but while its effects are widespread it is millennials who are truly at the sharp end. For older generations at least rising housing costs have been accompanied by improvements in the quality and security of housing, as more families have been able to own their home.”
“The big danger today is that young people are having to settle for lower quality, longer commutes and less security in order to afford a place to live, despite spending a record share of their income on housing. It is vital that all political leaders recognise the scale of Britain’s housing crisis which is placing an ever greater strain on families’ living standards so that their response is suitably radical.”