Homeownership out of reach for many

UK building society Nationwide reports that a shortage of homes coming onto the UK housing market is helping to keep house prices high. This is despite recent signs of cooling in the housing market.

Over the last year, prices are up by 2.9%, slightly lower than last month’s rate of 3.1%. The Royal Institution of Chartered Surveyors said estate agents had fewer properties on their books than at any time over the last 40 years.

For many young people, the cost of buying a home means it is unattainable. Homeownership amongst 25–34 year olds is 39%.

The decline in home ownership amongst the young is not isolated to just the UK. Home ownership has “declined rapidly” among Australian 18–39 year olds since 2001. In 2014 only 25% of this cohort owned a home. In California homeownership has dropped to 1940s levels.

Stephen Whelan writing for IZA World of Labor on the impact of homeownership and children’s educational outcomes says, “Studies commonly find that the children of homeowners achieve better education outcomes than children in rental households. The direct effect of homeownership on education outcomes is less clear, however.” He then suggests, “The benefits of homeownership appear particularly strong for low-income homeowners. While a range of tax and transfer policies are designed to facilitate and encourage homeownership, targeting is needed to ensure that positive impacts on education are achieved.”

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