Recent findings from the Institute for Fiscal Studies (IFS) show a rise in homeownership rates to levels not observed since 2010. As of the 2022/23 period, an impressive 39% of individuals aged 25 to 34 now own their homes, marking a notable increase from the 33% recorded in 2015.

This 6 percentage point leap signals a robust, albeit partial, recovery from the lows experienced over the past decade, giving hope to many aspiring homeowners within this age bracket.

The Peak and Trough of Homeownership

Despite the encouraging current figures, today’s homeownership rates for young adults still lag significantly behind the peak of 2000, when 59% of the same age group enjoyed the benefits of owning their property. This contrast highlights a 20 percentage point decrease, underscoring the substantial hurdles young people have faced in securing their own homes compared to two decades ago.

Recovery Focused on Middle Incomes

The resurgence in homeownership has predominantly been seen among middle-income earners. This group has benefited from a faster growth in disposable incomes relative to the general population since 2015, which could be contributing to their increased ability to buy homes.

Jonathan Cribb, associate director at the IFS, points out the critical nature of these shifts: “The collapse in homeownership among young adults has been central to policy concerns for a while: not surprisingly given that out of every 100 young people there were 20 fewer homeowners in 2022 than in 2000. But the recent trends are at least positive – with a gradual recovery for 25-34 year olds since 2015, potentially linked to better income growth over that period.”

Challenges and Prospects

While the figures provide some reasons for optimism, Cribb also notes that this recovery has been modest and both pre-dates and follows the pandemic period. With the looming threat of rising mortgage interest rates, there remains uncertainty over whether these positive trends will continue or face setbacks.

Older Generations Facing Declines

Contrary to the positive trends seen among the younger demographic, the 45 to 59-year-old age group tells a different story. Homeownership within this segment has experienced a steady decline. Currently, 69% of this group are homeowners, down from 80% in the early 2000s. This decrease reflects broader societal and economic shifts that have made it increasingly difficult for individuals to step onto the property ladder, particularly as they age.

The IFS highlights an 11 percentage point drop since the early 2000s, illustrating that those who have traditionally struggled to purchase homes are now reaching ages where the impacts of these challenges become more pronounced.