Estate agent

factfiction_108x60The claim

“In many parts of our country it has become normal for young people to leave, though not out of choice. This might be to find work, but more and more, it is to find a home that they can afford.”
Greg Clark, Communities Secretary, 2 July 2015

The background

Are young people being forced to move away from where they grew up, thanks to lack of affordable housing?

That was the claim from Greg Clark today, who told a Local Government Association conference that the “defining test” for current politicians was ending the housing crisis.

He said: “For centuries, to be exiled – to be sent away – was considered to be an extreme penalty, reserved for the most serious of offences against the community.

“If we want to maintain the chain of community – and a place for the next generation – then we must make sure we have the homes to welcome them to. The responsibility lies with us – national and local leaders alike.”

Are young people really being increasingly “exiled” from where they grew up?

The analysis

We asked the Department for Communities and Local Government for evidence to back up this worrying claim. They say it’s based on figures from the Council of Mortgage Lenders which show that the number of first-time buyers reached a record low in 2008. Just 159,000 were recorded, at a median age of 29.

First-time buyers are getting older, and there’s less of them. But to back up the claim you need to look at where people are moving and at what age. The ONS holds data on internal migration – that is, the number of people who move from and to somewhere else in the UK – and it’s fairly clear that young people make up the bulk of the movement.

But it’s difficult to pick out unusual fluctuations in migration from the kind of internal movement we would expect to see. You would expect young people to move away to go to university, so that accounts for at least some of the movement, but it’s difficult to assess exactly why people have moved.

What we need is historic data. Are greater numbers of young people refusing to budge than ever before? Or is the figure still relatively stable?

Looking back through old reports on internal migration, it’s hard to see where Mr Clark’s argument comes from. This year, internal migration for those aged 20-30 has gone up by 1.8 per cent or 17,000 people.

In 2013, the number went down by nearly 20,000, which suggests that this kind of fluctuation is in the normal range. It’s difficult to look further back as the data has been recorded differently, but losing or gaining around 2 per cent each year is not really a sign of a nationwide exodus of young people.

Nor is it fair to assume that this movement is a sign that people are being forced to move thanks to a lack of affordable housing.

The argument that people who can’t afford to move out would move out to a different part of the country doesn’t necessarily make much sense either.

Logically, if you can’t afford to move anywhere close to the parental home (assuming you want to), why would you move out at all? Wouldn’t you stay at home with your parents until you COULD move out?

Evidence suggests that this is exactly what’s happened over the last three or four decades.

ONS statistics shows that the number of 20 to 34-year-olds living with their parents has gone up by 669,000 (or 25 per cent) since 1996.

Research carried out by homeless charity Shelter last year found that a quarter of all young adults in employment still live at home. The charity call these young adults part of the “clipped wing generation”, and nearly half of them (48 per cent) said they haven’t moved out because they can’t afford to.

The Institute for Fiscal Studies released a report last year that showed that home ownership among young people had halved compared to those born in the 1960s.

The English Housing Survey also shows that ownership among 25-34 year olds has fallen dramatically; from 59 per cent just 10 years ago, to 36 per cent in 2013/14.

One thing that is definitely not up for debate is the fact that housing is increasingly unaffordable across the country.

In some parts of the country, getting a mortgage is impossible for many people.

According to the latest figures from Nationwide, the average first time buyer house costs 5.1 times average earnings. In London a first time property costs 9.4 times average earnings. Houses are cheapest in the North West and in Scotland, where the ratio is 3.4.

This is based on comparing first time buyer house prices to the mean gross earnings of a full-time adult worker in the various regions.

But even in the cheapest areas, the ratio is more than the multiple of income that mortgage lenders are currently prepared to offer.

The latest figures from the Council of Mortgage Lenders reveal that the average first time buyer is being offered a mortgage based on 3.37 times their gross income.

That’s based on figures from 95 per cent of UK lenders.

This means that for many single first time buyers or one-income households, getting a mortgage could be out of the question in many parts of the UK.

The verdict

Mr Clark is relying on evidence about first-time buyers in 2008 to make this claim.

That statistic shows that first-time buyers are few and far between, and that they’re getting older. But that doesn’t explain whether people have moved further away or stayed with their parents, so it’s hard to believe this trend of internal “exile” is real.

Studies show time and time again that young people are actually staying at home with their parents and putting off trying to buy a property rather than moving out of their hometown.

Rising house prices and increasingly unaffordable mortgages are almost certainly the cause of this, suggesting that Mr Clark is right to say affordable housing is a big problem, but wrong about the effects.

By Sophie Warnes