Getting poorer by the minute – generation rent has half the wealth of predecessors

People born in the 1980s are worse off than those born in the previous decade were at the same age, bucking the post-war trend whereby people born in one decade are better off at a certain age than those born ten years earlier.

As the economy grows, each generation normally has higher incomes than those born a decade earlier.

But by their early 30s, those born in the early 1980s had average household wealth of £27,000 per adult – about half the average wealth of the 1970s cohort at the same age (£53,000).

Those born in the early 1980s also have far less in housing wealth than earlier generations: just 40% of them were owner-occupiers at 30, compared with over 60% in the 1950s and 1960s.

The last cohort to have similarly low ownership were those born in the 1930s.

A new report by the Institute for Fiscal Studies blames the high cost of renting and the decline of generous company pension schemes.

People born in the early 1980s spend 28% of income on rent, compared with a spend of 15% on housing costs by people of the same age who are owner-occupiers.

Meanwhile, a separate paper by the London School of Economics has claimed that would-be first-time buyers are being frozen out of home ownership by households that hold on to their old home as a rental investment.

The LSE paper says: “Greater down-payment requirements hinder housing purchases by young households with less wealth. In turn, older and wealthier households become ‘accidental landlords’ who keep their previous home and rent it out when moving up the housing ladder.

“The fact that these entry-level houses are rented instead of being sold is what drives the change in the composition of transactions: sales of lower quality houses make up a smaller fraction of the total when down-payment requirements increase.”

x

Email the story to a friend

One Comment

  1. JSSoxted58

    This is where the government has to step in to control the rents in some way – rents in my area are far higher than the equal mortgages, but as they are paying such high rent they cannot save for a deposit, its a recipe which equals disaster for young working people or middle aged divorced couples!  Those that own their own home already and then downsize or move up are becoming wealthier by renting out their home at ridiculous rents, people have no option other than paying it as there is no social affordable housing available, even  for those that are in desperate need for it – it is forcing people to lose their job in order to claim benefit just to be able to afford rent!

    In my area, the majority of people are having to pay between 50-75% of their wages on private rental which is not sustainable and needs to change!

    Report
X

You must be logged in to report this comment!

Leave a Reply

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.