A Savings Problem that Hinders Homeownership, Interest Rates and Infrastructure Projects

While many have suffered significant disruption to their personal finances over the course of the pandemic, some have accumulated small fortunes. Young people make up a significant bulk of this cohort, perhaps having moved back in with parents in the face of great uncertainty. As a result, thousands of young people will have saved over the past year – an opportunity that should be capitalised on.

However, a problem that existed before the pandemic began and continues to prevail is how to turn more young professionals into homeowners. We know how positive it is for the economy when home ownership levels are high and how this benefits the individual too. However, in 2019, Santander Bank predicted that only a quarter of under 34s will own their own home by 2026, meaning the number of young homeowners will have halved in just two decades.

Some might argue that the savings yielded from time at home should be enough to cover a deposit for a house. However, these savings often pale in comparison to the average house deposit. The average millennial has £4,614 in savings whereas Halifax found that the average UK deposit for a home in 2018 was £32,841. When you factor in that the Bank of England has never set its interest rate higher than 0.75% in the past decade, the difficulty that young people are presented with is clear.

The final challenge is a lack of top-tier infrastructure projects taking place in the UK over the past 20 years. While it could be argued that these decisions may be political, two recessions since the turn of the millennium will always hamstring a government‚’s ability to greenlight such projects.

My policy proposal seeks to solve all of these components in a single idea.




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