The respected Institute for Fiscal Studies found average house prices in England have rocketed by a staggering 173 per cent since 1997, compared with increases in young adults’ real incomes of only 19 per cent.
Their analysis found that in 1996, with a 10 per cent deposit, more than 90 per cent of 25 to 34-year-olds would have been able to purchase a house in their area if they borrowed four-and-a-half times their salary.
But by 2016, that proportion had fallen substantially.
By this time, with the same deposit, only around 60 per cent of young adults would have been able to borrow enough to buy even one of the cheapest homes in their area – leaving properties out of reach for the remaining 40 per cent.
And in London, only around a third of young adults with a 10 per cent deposit could borrow enough to buy one of the cheapest homes.
Back in 1996, if they had borrowed four-and-a-half times their salary, 90 per cent of young adults in London could have done so.
The report on barriers to home ownership over the past 20 years will be published tomorrow in the IFS Green Budget 2018.
The IFS said soaring property prices compared to incomes has made it increasingly hard to raise a deposit for a home.
In 2016, around half of young adults would have needed to save more than six months of their post-tax income to raise a 10 per cent deposit on one of the cheapest properties in their area, it said.
Just one in 10 would have had to do this in 1996, according to the sums.
Polly Simpson, a research economist at the IFS and a co-author of the research, said: “Big increases in house prices compared to incomes over the last two decades mean that it is increasingly difficult for young adults to get on the housing ladder, even if they do manage to save a 10% deposit.
“Many young adults cannot borrow enough to buy a cheap home in their area, let alone an average-priced one. These trends have increased inequality between older and younger generations, and within the younger generation too.”
The IFS argue easing planning restrictions would increase home ownership and reduce both property prices and rents.
A spokesman for the Ministry of Housing, Communities and Local Government, said: “Last year saw the highest number of first time buyers for over a decade.
“Through our Help to Buy scheme and the cut in stamp duty for first time buyers we are helping restore the dream of home ownership for a new generation.”
£15K tax 'bribes' if landlords sell
MINISTERS should reward landlords who sell their flats to their long-term tenants by scrapping their capital gains tax, fresh plans reveal today.
Influential Westminster think tank Onward says capital gains tax relief should be given to buy-to-let landlords who sell to tenants of three years or more.
Experts say it would give a national average gain per property of £15,000, split between the average first time buyer and the selling landlord.
It’s hoped the move would encourage multiple property owners to offer longer lets and then sell on to Generation Rent who struggle to get on the property ladder by giving them a cash boost for a deposit.
Tory MP Neil O’Brien hopes the plan will be taken on board by Chancellor Philip Hammond in his Budget later this month.
Will Tanner, Onward director, said: “It is time for Ministers to give private renters the chance to make their house a home, just as a Conservative Government gave a previous generation of council tenants the Right to Buy their home years ago.”
Last week Theresa May pledged to build more council houses.
At party conference she announced the Government is to scrap a long-standing cap on how much councils can borrow against their current housing stock to erect more homes.
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