Young people can’t follow their career dreams due to high rents in big UK cities

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Young people can't afford to follow their dream careers due to high rents in big cities

One of the defining patterns of English life in which young people move from small towns with limited prospects to bigger cities to seek their fortune is in dramatic decline, research has revealed.

More young people are getting stuck where they grew up or went to university because they cannot afford rents in places where they can earn more money, according to the Resolution Foundation thinktank. It found the number of people aged 25 to 34 starting a new job and moving home in the last year has fallen 40 per cent over the last two decades.

Whereas previous generations were able to move to big cities such as London and Manchester or regional hubs like Leeds and Bristol to develop their careers, the current millennial generation is enduring a slump in mobility caused by rising rents, which can wipe out all of the financial gains of a move.

Even moves over short distances are barely worth making, the data shows. A person on average earnings in Scarborough paying average rent would have been 29 per cent better off if they had moved to Leeds in 1997 and paid average rent and earned average money. In 2018, rising rents and stagnant wages means the benefit after taking into account rent was just 4 per cent.

Moving from Sunderland to York in 1997 would have been worth a six per cent rise in earnings after rent, but would now result in a 24 per cent fall. Private rents have risen fastest in higher-paying areas of the country – rising by almost 90 per cent in the highest paying areas, compared to just over 70 per cent in the lowest paying.

Because moving jobs is the best way of increasing pay and being geographically mobile is the best way of finding those jobs, the thinktank said the trend could “stunt young people’s pay and career prospects”.

Lindsay Judge, senior policy analyst at Resolution, said,

Young people today are often stereotyped as being footloose when it comes to work. But in fact they are moving around for new job opportunities far less frequently than they used to. A key reason why people move around for work is the lure of a bigger salary. But increasingly those pay gains are being swallowed up by high housing costs.

The phenomenon is not just affecting the young. Someone working in a school in Cornwall, for example, would be considerably poorer moving to a similar job in Bristol.
A move from east Devon to Bristol in 1997 would have delivered a 19 per cent uplift in earnings after rent but rising property costs there meant that by 2018 that boost was worth just a one per cent increase, according to the data.

The findings came as the Affordable Housing Commission released research that found 43per cent of all renters were now facing affordability problems and that 5.5 million renters were currently unable to buy a home of their own.

The commission, established by the Smith Institute thinktank and chaired by the crossbench peer Richard Best, said that when rents or purchase costs exceed a third of household income for those in work, it can lead to financial difficulties and these problems become critical where housing costs are 40 per cent or more of household income.

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