Young people are spending three times more on housing than their grandparents did.
In this area the percentage of income spent on property is likely to be much higher than the UK’s average of 23%. In London, huge house price inflation has led to people spending a higher proportion of their disposable income on housing. This has been driven partly by a sustained period of low interest rates and partly by demand outstripping supply.
Attitudes to lending have changed too since our grandparents were young. Banks are willing to lend more to individuals as a proportion of their salary than they used to. Back then far fewer women were working whereas today, with more couples working, the banks take both people’s salaries into account.
When our grandparents were in their 30s there was much more movement in the property market than there is now – people would typically buy a smaller home outside their target area and upscale gradually as finances allowed.
Baby boomers (those born between 1946 and 1965 spent, on average, 17% of their income on property, while those born between 1966 and 1980 spent an average of 22%.
The report revealed that while post-war baby boomers now benefit from record levels of outright ownership, 36% of young families (aged 25-34) live in private rented accommodation.
But things are looking up. The number of mortgage loans issued to first-time buyers in the past year is at its highest level since before the financial crisis.
Posted 3rd October 2017
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