Closing the generation divide: Will Phil Hammond’s new building stimulus package help the young?

The new fund would help build 25,000 new homes by 2020 while the plan to use public land would enable the building of a further 15,000 in the same period. The initiative is meant to appeal to voters who have been shut out of the housing market by years of rising prices and tight lending conditions.

The NHF recently published a few startling stats that demonstrate just how skewed the UK housing market has become, and how difficult it is for a young person to own their own home without the help of a family member. 37% of 25 to 34-year-olds are homeowners, a fall from 59% in 2004 and home ownership levels are now at 64%, down from 71% in 2003.

The younger generation could hope for a massive pay rise over the next few years, but this looks highly unlikely considering wages across Britain, as well as the rest of Europe are either stagnant or falling. According to Jeremy Duncombe of the Legal & General Mortgage Club,“What is clear is that annually house prices are still on the rise at levels well above wage inflation”.

Another option that is increasingly used is buying with friends. Figures from conveyancing firm My Home Move show the number of homes bought by “single” purchasers have fallen by an average of 4% over the past five years, equivalent to around 10,000 transactions a year. The benefits of pooling resources are clear: My Home Move figures show a couple of first-time buyers can afford homes worth around £100,000 more than their single counterparts.

But while Generation Rent feel frustrated by the property situation, new research has showed the baby boomers are also feeling dissatisfied. A recent survey of 2,044 adults by the National Housing Federation showed that there is a real concern among baby boomers about the economic divide between generations, most clearly seen in the housing market. Britain’s 1.5 million “over-85s own more of the nation’s housing wealth than everybody under 35”, the NHF said.

Almost two thirds of over-55s, or 62 per cent, would accept either no growth or a fall in the price of their home if it would help young people on to the property ladder. Thirty-five per cent even claimed that they would be happy to see their property lose 10 per cent of its value.

This may well be the result if Philip Hammond’s stimulus package proves to be successful. But the government’s targets are modest compared to the 300,000 homes per year that a committee of lawmakers estimate Britain needs, in order to meet demand and cool price growth.