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Britain’s Housing Crossroads

Journalist: Gabriel McKeown, Newspage

ended 25. April 2025

Over the last four decades, the UK has witnessed the role of housing transform, with it no longer being enough for a home to just be a place to live, it must now function as an investment, a pension, and a major source of inheritance for the next generation. 

Kick-started by the Thatcher-era Right to Buy discounts and turbo-charged through City deregulation, house prices have climbed from roughly four times average earnings in the late 1980s to about nine times today. Between 1997 and 2017, average house prices in England rose by 173% in real terms, while real incomes of younger adults grew by only 19%. With property values far outpacing this modest growth in earnings, home ownership among young adults collapsed, and by 2017, just 35% of 25 to 34-year-olds owned a home.

The sharp rise in house prices over the previous forty years has overwhelmingly benefited a small subset of the population, with many missing out on this significant wealth transfer. By and large, housing wealth has been transferred from the young to the old, from renters to owners, and from the less affluent regions to the booming cities, leading to an ever-growing national divide. 

I would be interested in comments that add additional perspectives to this original story on the state of housing affordability and the generational divide in homeownership. Potential questions to answer:

  • Given current income ratios of around 9 times, do you think homeownership is still a realistic aspiration for younger people, or will we see a generation of perpetual renters?
  • How heavily do your clients rely on property as their primary retirement asset, and what diversification strategies, if any, are you recommending? 
  • What planning, tax, mortgage, or regulatory reforms would most effectively rebalance the market and restore affordability without sparking a housing market crash?

Original story: 

The Unattainable Dream - How Britain’s Housing Obsession Broke a Generation - https://www.sadrabbit.media/p/the-unattainable-dream-how-britains?r=5cdu7l

Deadline: 14:00 - 25/04/2025

4 responses from the Newspage community

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Editor
Tony Redondo
Founder at Cosmos Currency Exchange
Nothing short of a cross-generational push is needed to enact change. UK house prices have risen from 4x earnings in the 1980s to 9x earnings now. This has made homeownership elusive for young adults with only 35% of 25-34-year-olds owning homes by 2017. For young buyers with a x5 price-to-earnings ratio and 36% of pay on mortgage repayments, the dream of property ownership is fading with many facing perpetual renting as deposits remain out of reach. Those already on the property ladder heavily lean on property values which now represent 70-80% of net worth. Diversifying into index funds or bonds for liquidity and resilience may be an option. Possible reforms include a shift to rule-based zoning for 400,000 homes a year; a new fairer capital gains tax regime; replace stamp duty with land tax, and redirect bank lending from mortgages to productive sectors to boost affordability without sparking a crash.
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Editor
Dariusz Karpowicz
Director at Albion Financial Advice
The great British dream of home ownership has morphed into a nightmare for younger generations, with today's astronomical price-to-income ratios creating an almost insurmountable barrier to entry. What was once a realistic aspiration has become a privilege of inheritance or parental support, as the housing ladder's bottom rung rises ever higher beyond reach. The imbalance isn't just creating a generation of reluctant renters but fundamentally reshaping our society's relationship with property, wealth and opportunity.
This divide demands bold action beyond political soundbites about building targets that rarely materialise. We need comprehensive reform: zoning changes to enable genuine housing growth, taxation that discourages property hoarding, and financial policies that redirect capital from property speculation to productive investment. Without intervention, we risk cementing a two-tier Britain where housing wealth becomes even more concentrated, leaving millions paying someone else
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Faisal Sheikh
Managing Director at Monmouth Capital
"My house is my pension." Heard it many times. My family is an interesting case study: with 14 years between my oldest sister (who bought her house in the mid-90s) and my youngest sister (who rents). It's not that one is necessarily better off than the other per se; it's more the case that, having been able to afford a home which is now the dominant asset on her balance sheet, the older sister has made and continues to make different choices to the younger. The latter, while initially feeling as if she "missed out", has actually found she appreciates the flexibility of renting and the fact that it makes possibilities such as moving to work abroad feel more achievable, without being so heavily anchored to a single place.
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Keith Budden
Managing Director at Ensurety
That there is a housing crisis is certain - with over 30 European countries now having a higher percentage of homeowners than the UK (when it used to be the case that the UK was in the top 10) something has clearly gone wrong. Add to that the actions of the current Government potentially dissuading private landlords, the almost total lack of new council housing, and housing associations coming nowhere close to meeting demand, something has to give - the question though is what? The Government has tasked local authorities across the land with ambitious housing targets, but even if they can find the sites, finding the investors, and in turn finding sufficient skilled tradesmen to build the houses is a nigh on impossible task. On sites, as one local authority leader put it to me recently, if we can't find sites to move outwards, we have to move upwards and build many more apartment blocks. It needs radical change, but any change that devalues property will meet an angry public reaction.