Here’s one of the most important charts you’ll see on the UK economy. It’s from the Institute for Fiscal Studies’s report on household incomes today, produced with the Joseph Rowntree Foundation.
As you can see, if you were born before 1978, the majority of your age group could be assured of owning their own home by the age of 30. But those born thereafter have had less and less opportunity to own a property.
I’ve been banging on about this phenomenon for a while now, but it’s impossible to overemphasise its importance. In almost every election for the past century, the parties contesting the vote could reasonably promise that they would give voters, young and old, a better and better chance of owning a home. This chart underlines the fact that for younger generations that simply isn’t true.
And if today’s Office for National Statistics data on house prices is anything to go by, the problem may only get worse. House prices in London are now rising at the fastest annual rate on record. And while this is still a tale of two housing markets – London and the rest, the rest are beginning to catch up.
The reality is that while the ONS numbers bespeak continued strength in the market, it may already be beginning to soften. Forward-looking indicators of London activity are beginning to fall, as affordability pressures begin to bite. But whether the London market merely cools off or begins to slump is another matter.