The generational wealth gap hits home
Sixty years ago, a young family of four were able to own a house and support themselves comfortably on a single income without breaking the bank – a far cry from the situation facing today’s potential homeowners.
Nothing can gain a greater negative reaction from a millennial than telling them one of two things: either “kids have it easy these days”; or the even more condescending “young people don’t know what hard work is”. For a long time, the difference in income between generations was often put down to a lack of work ethic and as a result, a lasting sentiment of animosity developed between the post-war baby boomers and the generations that followed. Today, however, it has become clearer that differences in income and wealth are often not a result of a lack of motivation, but rather a result of disparity between what was affordable 60 years ago, versus what is affordable today.
While the growing margin between wage increases and living costs has been well publicised over the last few decades, it is rare to see examples of those margins. But thanks to research published in July by the Resolution Foundation, the stark contrast in rental expenses has been illustrated with adjustments for inflation – and these figures show that millennials spend on average £44,000 more on rent by the age of 30 than the baby boomers did, while homeownership at the age of 30 has fallen from 58% for those born between 1946 and 1965, to 42% for those born between 1981 and 2000.
Baby boomers not only paid much less for property and rent, but also account for 39% of today’s landlords, while enjoying half of all the income made from rental properties in the UK. Plus, Generation X also accounts for a relatively significant 31% share of the number of landlords, leaving millennials out in the cold.
The greatest issue for all potential and actual homeowners is that prior to owning a house many hope that housing becomes more affordable, yet once they manage to buy the property, they then hope that house prices will rise. As homeownership becomes an increasingly elite club, property selling experts have found that those being left behind are finding their chances of completing a purchase slipping away rapidly.
“The nation’s housing crisis is perhaps the most visible example of growing inequality between generations,” said Laura Gardiner, senior policy analyst at the Resolution Foundation. “Young people today are paying a heavy price for decades of falling homeownership.”
But this is not just an issue for the younger generations, for those approaching retirement age are often looking to downsize to more affordable properties – but are finding that once their larger homes are on the market, they need to massively lower their asking prices in order to gain any interest, due to the shrinking pool of potential buyers with the necessary income.
While those looking to sell can avoid waiting for a sale by using property buying companies who buy any home for cash, those preferring the traditional route of estate agents are finding their lives placed on hold as time ticks by, eventually settling for a price way below what they were expecting.
Looking to sell your home fast? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.
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