Last October, we published our report, Building Castles in the Air, which looked at the difficulties that young people face in trying to access the housing market. In the report, we looked at how high youth unemployment, limited access to finance, high house prices and rental rates all conspired to prevent young adults from building their own independent lives outside of the parental home.
We also highlighted how the affordability of housing differs significantly depending upon where you live in the UK. In the most affordable area, Stoke-on-Trent, the proportion of income required for fixed property costs was a fifth of the average salary, while the least affordable areas (the London boroughs of Kensington and Chelsea, and Westminster), required more than the total average salary for fixed property costs alone.
What has become even more obvious since we published our report, is that the disparity between different areas is increasing, making it even harder for young people in certain areas of the UK to move on from life under mum and dad’s roof.
The latest figures from the Council of Mortgage Lenders (CML) estimate that more than 700,000 UK households are now suffering from negative equity. Just as our report demonstrated regional differences in affordability, so too do the CML figures. House prices throughout the UK were adversely affected by the financial crisis but their ability to recover has not been uniform across all regions. For example, London and the South East have around 5% of households that owe more on their mortgages than their property is worth but in the North West, 15% of households have negative equity and in Northern Ireland the figure is as high as 35%.
No matter where young adults live, this disparity poses problems. In areas where house prices remain high, affordability remains a significant issue for aspiring young home owners. In areas where prices have dropped from their pre-crisis height, fewer properties will be available to first-time buyers. Once again, young people are paying for the problems of a financial crisis they had no hand in.
