Soaring house prices have deepened generational wealth inequalities in Britain, where rampant inflation and stagnant wages make it hard — if not impossible — for younger people to get on the property ladder, an influential think tank has said.
The government is trying to tackle rampant inflation but the problems outlined by the Institute for Fiscal Studies (IFS) report are not a quick fix.
“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 IFS said.
Such wealth “is increasingly at the heart of the most pressing economic inequalities today” in Britain, the IFS said.
Britons born after 1980 are far less likely to own their own home than 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,” the IFS said.
Inherited and parental wealth are increasingly important for younger generations.
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-19 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.”
The average UK home price quintupled over the last three decades to stand at £296,000 ($340,600) in August, according to recent official data.
The market is now showing signs of falling slightly, pressured by the cost-of-living squeeze and a series of Bank of England interest rate hikes that have raised the cost of home loans.
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Seats open:
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Rating: 4/5
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Launched: 2008
Categories: Health, energy, water, food, global high schools
Prize: Dh2.2 million (Dh360,000 for global high schools category)
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335 million people positively impacted by projects
430,000 jobs created
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50 million homes powered by renewable energy
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Price, base: Dh5.1 million
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