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Why the Housing Ladder Feels Like a Steeper Climb 🪜

Writer's picture: PlutoPluto

If you’ve ever stared at your bank balance, flicked through Rightmove, and felt an existential crisis brewing, you’re not alone. Data from the Office for National Statistics (ONS) on housing affordability in England and Wales from 1997 to 2023 confirms what millennials, Gen Z, and basically anyone without a trust fund already knew: buying a home has never been harder.


From Dream to Distant Reality

In 1997, the average house cost just 3.5 times the typical annual salary. Back then, Tamagotchis were cutting-edge tech, and the housing market felt within reach for many. Fast forward to 2023, and that affordability ratio has ballooned to 8.1 times annual earnings. The peak came in 2021 at 8.95, when remote work was trending, but the dream of homeownership felt more remote than ever.


What’s Driving This Crisis?

  • House Prices Outpacing Wages: Over the past 26 years, house prices have skyrocketed, while wage growth has moved at a snail’s pace. When one competitor is sprinting and the other’s in quicksand, it’s hardly a fair race.

  • Demand vs. Supply: Chronic housing shortages combined with relentless demand have turned the market into the Hunger Games for property. More buyers, fewer homes, and the result? Sky-high prices.

  • Cheap Credit Hangover: Historically low interest rates in the 2010s made mortgages cheaper, pushing prices even higher. Now, with rates climbing, the affordability squeeze is as real as ever.


The Slight Silver Lining

There’s a glimmer of hope: since 2021, the affordability ratio has dipped slightly. In 2023, it’s down to 8.14. Slowing house price growth and rising wages may be at play here. But ‘less unaffordable’ isn’t exactly a victory worth popping champagne for.


Why Other Generations Just Don’t Get It

Ever heard the classic, “Just save harder”? Let’s unpack that. Back in 1997, a median earner needed about three and a half years’ worth of income to buy a home. Today? You’d need over eight years of income – and that’s assuming you don’t spend a penny on anything else. Forget lattes, forget Netflix, forget… living.

It’s not that previous generations didn’t work hard. It’s just that the financial deck wasn’t stacked so aggressively against them. The numbers don’t lie, even if the anecdotes suggest otherwise.


So, What’s Next?

The housing market is a complex beast, and there’s no one-size-fits-all solution. Tackling affordability will require bold policy changes: boosting housing supply, supporting wage growth, and rethinking how credit influences property values.

In the meantime, if you’re still holding onto the dream of owning a home, remember: it’s not your avocado toast habit holding you back. It’s a system that needs serious reform.


Disclaimer

Not financial or tax advice. No content produced by Pluto is financial, accounting, legal or tax advice. Our content is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This article is not tax advice. Talk to your accountant. Do your own research. The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.


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