Housing association tenants could have the right to buy, what about generation rent?

Neil MacDonald, economics producer, explains how the Conservatives pledge doesn’t offer much for the young professionals increasingly giving up the dream of a home of their own. He reports:

David Cameron says he’s keen to keep the dream of a property owning democracy alive. Unfortunately, this year’s English Housing Survey shows that dream is dying for 25-34 year olds.

Ten years ago, 60% of that age group were owner occupiers while just 20% were private renters.

Last year, just 30% were owner occupiers while around 45% were private renters. And the chart on page 15 shows the trend looks pretty well set to continue.

At the risk of stating the obvious, young people aren’t buying because house prices are too high for them. The chart from the Nationwide below sets out the problem – it shows the relationship between house prices and earnings over thirty years.

House prices became less and less affordable in the booming mid-2000s. Then slumped in the great recession. But the housing market was rescued by the Bank of England slashing interest rates to 0.5% and leaving them there for six years. So we’ve managed to combine a sharp economic slowdown with house prices remaining expensive: