UK property boom worsens inequality between generations: Study

Britons born in the 1980s are far less likely to own their own home, compared with those born from the 1940s onwards. PHOTO: AFP

LONDON - Britain’s soaring house prices have deepened inequality in recent decades, leaving younger generations struggling to earn enough to get on the housing ladder, a study concluded Wednesday.

The huge growth in house prices has contributed to collapsing rates of home ownership and is acting to push up the amount of the country’s wealth held by older generations,” the Institute for Fiscal Studies (IFS) think tank said in a report.

It added that such wealth “is increasingly at the heart of the most pressing economic inequalities today” in Britain, which currently faces a cost-of-living crisis as wages fail to keep pace with decades-high inflation.

The average UK home price quintupled over the last three decades to stand at £296,000 (S$472,482) in August, recent official data showed.

The market is now however showing signs of falling, pressured by the cost-of-living squeeze – and a series of Bank of England interest rate hikes that ramped up the cost of commercial home loans.

The IFS added Wednesday that Britons born in the 1980s are far less likely to own their own home, compared with those born from the 1940s onwards.

“Because wealth has been growing much faster than income, it is becoming harder for working families to save enough to climb the wealth distribution,” the think tank continued.

Inherited and parental wealth were becoming increasingly important for young generations.

And the IFS added that the coronavirus “pandemic and its aftermath may well have increased wealth, and wealth inequalities, further”.

“Increases in saving were greatest for the most well-off and rises in asset prices also benefited them” during Covid lockdowns.

IFS deputy director Robert Joyce said younger generations could no longer be certain of enjoying the same wealth as those who came before them.

“A generation of Britons has ridden a wave of growing asset prices, pushing up the value of their houses and investments,” he said.

“Meanwhile, more than a decade of stagnant earnings has held back younger generations for whom earning their own economic success has become increasingly difficult.

“The fact that we can no longer be sure that the young will grow up with living standards that match their predecessors is a remarkable social change.” AFP

Join ST's Telegram channel and get the latest breaking news delivered to you.