Wealth Gap Widens for Britain’s Young with Surge in House Prices
Surging house prices in the U.K. are making it more difficult for younger generations to follow the most common path for accumulating wealth, widening a gap between the rich and the poor. Homeowners are benefiting from the coronavirus crisis, with cheap borrowing and government tax cuts driving real estate prices to an all-time high last year. The cost of a home averaged 253,374 pounds ($340,000). The cost of a home averaged 253,374 pounds ($340,000) in December, up 6% from a year ago, according to mortgage lender Halifax.
That gravity-defying increase during the worst economic slump in three centuries has put ownership further out of reach for the young, particularly in London where the value of property has almost doubled in the last decade. It’s piling misery on a section of the population already hard hit by the pandemic, with young people more dependent on sectors closed by lockdown.
More and more houses are owned by the same people, a narrow segment of society who are renting them out to younger people. There are implications for the productivity of the economy too. High housing costs can make it hard for workers to relocate, depriving companies of talent and robbing young people of opportunities for better jobs and pay. The widening gulf between “generation rent” and those just a decade or two older has spawned a range of housing initiatives since the financial crisis.