More evidence has emerged that British millennials are struggling.
According to a report (pdf) released on Sept. 30 by the Institute for Fiscal Studies, 40% of those born in the early 1980s were homeowners at the age of 30—a rate lower than any other post-war generation. 55% or more of people born in the 1940s, 50s, 60s, and 70s were homeowners by age 30, in contrast. (Britain encouraged home ownership after the house building boom that followed World War Two—a trend cemented by Margaret Thatcher’s flagship policy in 1980 which gave council housing tenants the right to buy their homes.)
This drop is accompanied by what the researchers call a “dramatic divergence” between the amount renters spend on housing costs, versus what homeowners spend. They analyzed official survey data and found that between the ages of 26 and 30, renters born in the early 1980s spent around 28% of their income on average on housing costs. For homeowners in this group, the figure was 15%.
This divergence has been increased since the 1960s:
Blistering property prices have helped to make getting on the UK property ladder a distant dream for many millennials. A report released this summer (pdf) by the Resolution Foundation estimated that, in real terms, millennials will spend an average of £44,000 ($57,000) more on rent in their 20s than Baby Boomers did.
Nowhere is the heat felt more than in London, where the average property is worth 10 times the average person’s earnings—double the average ratio for the rest of the UK. Some thirty-somethings are upping sticks and leaving the capital altogether in search of more affordable locations.
Overall, it’s a bleak picture. According to the IFS’s analysis, those born in the early 1980s have half the median net household wealth of those born a decade earlier, by the same age. The researchers refer to wealth as the value of any property owned, other financial assets, and the value of pensions. (Besides low home ownership rates, a drop in access to generous private sector pension schemes is affecting this generation’s ability to accumulate wealth, the IFS found.)
Millennials in the United States are also less likely than previous generations to own a home. Data released in May by the Pew Research Center found that, now more than ever, US adults under 35 are choosing to live with their parents over any other type of living arrangement. Though, as Derek Thompson at the Atlantic points out, this generation has not abandoned the idea of home ownership so much as “hit the pause button on parenthood and mortgages.”