Houses cost millennials 14 times more than baby boomers

Tom Belger
Finance and policy reporter
The town of Burton upon Trent in Staffordshire, England. New figures show how the cost of buying a home has risen. (David Goddard/Getty Images)

Average property prices have risen twice as fast as wages in the UK over the past four decades, according to a new analysis of official figures.

Millennials looking to buy a home face prices that are now at least 14 times higher than when baby boomers tried to get on the property ladder in the late 1970s. But average wages have risen at less than half the pace of runaway house prices in recent decades, rising less than seven times over since 1979.

Analysis of official data by digital broker Mojo Mortgages and Yahoo Finance UK reveals the stark contrast between the generations in the property market.

A baby boomer born in the 1950s could buy the typical British home for about £16,800 in 1979, if they were able to get on the ladder as buyers often did in their 20s. The average home only cost just under four times the average pay packet, with the typical worker taking home around £4,200 a year.

Read more: Average UK house prices close to record highs

But millennials looking to buy now, at an average age of 33, face a far greater gap between incomes and prices. The average home is now more than eight times higher than average wages.

The average property sold for around £235,300 last year, according to data from the Land Registry. Meanwhile typical pay packets came in at just over £29,000 last year, according to the Office for National Statistics (ONS).

British workers have seen a significant squeeze on pay particularly since the financial crisis, with younger workers among the hardest hit. But property prices continued to rise after the crash, and are now climbing once more after a recent slowdown.

The growing disparity helps explain why home ownership rates have been on a downward trend over the past decade, despite a recent uptick. Average buyers also now take on proportionally larger debts than previous generations, with only getting on the ladder because of competitive mortgage lending and historically low interest rates.

Read more: Landlord numbers sink to seven-year low after government clampdown

Mojo Mortgages combined the official data with estimates of spending habits, deposits and debts to show how getting a mortgage appears to have become harder over the decades.

The broker released the findings to mark the launch of its new online MortgageScore tool, aimed at showing would-be buyers how likely they are to get a mortgage.

Buyers are given a score out of 1,000. The tool suggests the average buyer in the 1970s would notch up 808 points, but chances have deteriorated with each decade. The typical worker in the 2000s scored 508, falling even further to an average of 410 last year.

Richard Hayes, CEO of Mojo Mortgages, said: “Home ownership is a top life goal, but for many first time buyers these days, it’s something they feel they won’t be able to achieve anytime soon.”

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