Are Suffolk millennials going to be worse off than their parents?
- Credit: PA
With mounting debt, soaring house prices and slow wage growth, an age group known as ‘millennials’ faces belonging to the first generation worse off than their parents.
That warning comes as new research shows average rent rose by almost 5% in this region over the last year – putting the prospect of home-ownership further out of reach for those born between the early 1980s and the early 2000s.
As Britain prepares for fresh spending cuts to dominate news of tomorrow’s Budget, one twenty-something said the odds were increasingly stacked against him ever owning a home.
While the cost of buying a house goes up, so does the cost of renting one, according to nationwide data on new tenancies – a growing number of which are being taken up by families.
In East Anglia, the HomeLet Rental Index found that average rent increased from £760 to £793 between February 2015 and 2016.
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The landlord agency’s research also revealed an increasing number of tenants per property, with 7% of homes now let to four or more people, compared to just 2% in 2008, suggesting people were managing higher rents by meeting costs as joint tenants.
A former cabinet minister argued that Britain could end up “permanently divided” by inequality between the generations.
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Alan Milburn, chairman of the Social Mobility and Child Poverty Commission, told The Guardian that rates of homeownership among young people, or Generation Y as millennials are also called, were in danger of falling below 50% for the first time.
Meanwhile, Martin Totty, chief executive of HomeLet’s parent company, Barbon, said latest figures were the result of an imbalance between demand and supply in the private rental market.
Only in the North-West and North-East of England did monthly rents dip over the last year.
Mr Milburn said that without the help of their ‘baby boomer’ parents, many millennials would be unable to afford a home.
His comments came as an Ipsos Mori survey found about 54% of the country believed younger people’s lives would be worse than their own generation’s – the highest proportion ever recorded, the polling company said.
“What both the polling and the data suggest is that we may have reached an inflection point which, if these trends continue, we may become a society that is permanently divided,” said Mr Milburn.
“Certainly on homeownership, we’re heading for a world where rates of homeownership among young people are below 50% for the first time.”
People born in the 20 years after the Second World War enjoyed more affordable housing, final salary pensions, free university education and greater social mobility.
According to the Office of National Statistics, the median income of retired households was largely unaffected by the economic downturn and rose by 7.7% (£1,500) between 2007/08 and 2014/15.
In contrast, non-retired households’ median income in 2014/15 remained 3.1% (£900) below its level in 2007/08.
Barbon’s Mr Totty said: “We’re continuing to see the effect of the imbalance between demand and supply in the private rental market: average rents are still rising and, while we are not seeing the double-digit increases recorded in some areas of the country during the summer of last year, the cost of a new tenancy continues to rise more quickly than general inflation.
“Our data on the number of tenants in each property gives a fascinating insight into the changing nature of the private rental market. Landlords are letting out homes to many more families, with rental property representing an increasingly important alternative to owner occupation. We’re also seeing people manage with higher rents by meeting the costs as joint tenants.”