Even the cheapest local homes are out of reach for at least 40 per cent of young adults according to a new report from the Institute of Fiscal Studies.
The IFS claims that as long as they had a 10 per cent deposit, in 1996 over 90 per cent of 25- to 34-year-olds would have been able to purchase a house in their area if they borrowed four and a half times their salary.
That four-and-a-half ratio is the maximum that most lenders will now allow.
However, the institute also says that by 2016, that proportion of young adults had fallen substantially. Even with a 10 per cent deposit, only around six in 10 of all young adults would have been able to borrow enough to buy even one of the cheapest homes in their area.
It says that barriers to homeownership are particularly high in London where – even with a 10 per cent deposit – only one-in-three young adults could borrow enough to purchase one of the cheapest homes in their local area.
Back in 1996, borrowing four and a half times their salary, 90 per cent of young adults in London could have done so.
Polly Simpson, a research economist at IFS and a co-author of the research, says: “Big increases in house prices compared to incomes over the last two decades mean that it is increasingly difficult for young adults to get on the housing ladder, even if they do manage to save a 10 per cent deposit.
“Many young adults cannot borrow enough to buy a cheap home in their area, let alone an average-priced one. These trends have increased inequality between older and younger generations, and within the younger generation too.”