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UK Housing: First-Time Buyers Face Steep Climb
21 Aug
Summary
- Younger generations are less likely to own homes than previous ones.
- House prices have significantly outpaced income growth for decades.
- Construction costs and a lack of skilled staff hinder new home supply.
For those born in the mid-1990s, owning a home is a less likely prospect than it was for younger generations in previous decades. In the 1990s, twenty-somethings were nearly twice as likely to be homeowners, with even earlier generations having a greater chance. This shift is largely attributed to property prices consistently outpacing income growth over many years.
A critical factor contributing to this trend is a significant deficit in housebuilding. England alone requires an estimated 300,000 new dwellings annually, but recent figures show considerably fewer being constructed. Inflation has driven up the costs of raw materials, labor, and energy, with global events like the war in Ukraine further impacting prices.
Compounding these issues, the construction industry faces a shortage of skilled staff, a problem exacerbated by Brexit. These combined pressures mean building a new home is substantially more expensive than just a few years ago, and analysts predict further cost increases. Strict planning regulations, while necessary for environmental and safety standards, also add to development costs, deterring some housebuilders.
