A millennial in China nearly three times more likely to own a home than one in Britain

By Graham Vanbergen: In a recent speech (5th March) Theresa May promised to “restore the dream of home ownership” by way of announcing a few measures aimed at tackling Britain’s housing crisis. This is more likely a cynical attempt to win back younger voters than to realistically solve this rapidly corrosive social problem that will soon see a intergenerational divide emerge.

For all of the ‘bluff’ from politicians, the housing crisis appears to have been fairly low on the agenda list of importance when you consider some basic facts.

 

In the last seven years, we have had seven housing ministers – but in the last 20 years we’ve had 17 – what does that say about tackling one of the greatest social, economic and political challenges of our time.

 

David Cameron had four in three years. This ultimately begs the question of whether this sort of political backdrop will be able to have any policy proposals that actually get through to fruition and achieve the government’s much-publicised goals for increased housing delivery, affordable or otherwise. For decades there have been promises, for decades there has been failure.

 

The Institute for Fiscal Studies has recently revealed that at the age of 27, those born in the late 1980s had a homeownership rate of 25%, compared with 33% for those born five years earlier (in the early 1980s) and 43% for those born ten years earlier (in the late 1970s).

The data tells us a more detailed picture considering property pricing and incomes. In 2015–16 almost 90% of 25- to 34-year-olds faced average regional house prices of at least four times their income , compared with less than half twenty years earlier. At the same time, 38% faced a house-price-to-income ratio of over 10, compared with just 9% twenty years ago.

Of course, you would expect there to be differences in today’s world for those in different socio-economic backgrounds. In 2014–17, 30% of 25- to 34-year-olds whose parents were in a low occupational class (e.g. delivery drivers or sales assistants) owned their home, compared with 43% of those whose parents were in a high occupational class (e.g. lawyers, teachers or estate agents).

Twenty years ago two in three young adults owned their own home, today that figure has dramatically fallen to one in four. From 66 per cent to 25 per cent – a decline rate average of just over 2 per cent per year – and still falling.

 

One really absurd statistic that beggars belief is that 70 per cent of millennials in China own their own home. Obviously, the Chinese government think it is far more important for their citizens to have a home than ours does.

 

All of this is hardly much of a surprise when property prices have increased by around 7.5 per cent a year in Britain whilst wages have barely risen by one quarter of that. In the meantime, the taxpayer has to fork out £1 billion a year on housing homeless families in temporary accommodation – a rise of over 45 per cent since 2010. Britain now has over 120,000 children living in B&B’s across the land – a sad indictment of successive government failure to protect their own people.

 

Thatcher’s property owning democracy has had dire social consequences which, is still unraveling to this day. After the mass council homes sell-off through Right-To-Buy, over 40 per cent ended up in the hands of landlords that charge considerably more rent than when they were council homes.

Forced by government policy, councils were then unable to keep 100 per cent of the revenue generated by these sales and then the pledge to build like-for-like replacements for every council home sold was broken. The government has raked in over £800 million from these practices – all of which should have gone towards building new and affordable homes for young adults and key workers.

Another statistic that builds anger amongst those trapped in this situation is that for every six council homes the government forced councils to sell, just one was built in replacement.

Help-To-Buy, another market distorting financial instrument that put the taxpayer on the hook for as much as £10 billion during the Osborne years did nothing towards housing building.

Amazingly, the influential Public Accounts Committee said as far back as 2014 that the Help-To-Buy programme had “lumbered the taxpayer with risky loans for decades which had not been properly assessed.” It said that the portfolio of loans will impose a heavy administrative burden for decades to come.

Figures from the Ministry of Housing, Communities and Local Government show that today taxpayers are now forking out an eye-watering £7.5million a day to fund a scheme that although aimed at first-time buyers has done little more than drive up property prices, leaving even more home owning hopefuls stranded and earned builders a fortune on the way. One could even go as far as to say that taxpayers have effectively been subsidising the building industry.

Since Help to Buy was launched in 2013, nearly 145,000 families have received financial assistance with deposits from the scheme. More than £2billion was leant in the first nine months of last year alone – or £7.5million a day. In the meantime, over 1.5 million people wait for a council home in England and Scotland and even this figure is distorted due to rules being changed on who could apply back in 2012. By 2016, a quarter of a million people had been struck off waiting lists.

In 2013, the average house price in Britain was £167,682. As at last December (last land registry data set) that price has increased to £226,756 – an increase of 35.2 per cent, far outstripping average wage growth leaving millions without a stake in society.