Home ownership plummets by half among those under 35 in a decade

Home ownership plummets by half among those under 35 in a decade

The financial survey of families, the results of which the Bank of Spain published this Wednesday, reveals the strong downward trend in home ownership among those under 35 years of age. As revealed by this survey, the number of households that own their home has fallen by almost half in just a decade. The report that is published now, and refers to the evolution from 2017 to 2020, reveals the strong imbalances that remain between the distribution of wealth and income both by age and between the different social levels.

With regard to young people under 35 years of age, the Bank of Spain finds that in 2020 only 36% of these households owned their home. This is a fact that highlights the strong gap in access to housing by the youngest segments of the population compared to other ages. For example, from the age of 45, the figure is far greater than 74%. In addition to these differences, the survey indicates that there has been a great setback in the different waves of this survey, which is carried out every three years. Less than a decade ago, in 2011, the figure was 69%, almost double, among those under 35 years of age.

The report now published by the Bank of Spain is limited to the situation of the households surveyed at the end of 2020. In other words, there is a good part of the effects of the pandemic and, of course, the effects of high inflation that are still they are not appreciated in the results of the survey. The body has decided to change the mechanics of this report and will carry it out every two years, shortening the period between one and the other.

Despite the partial nature of these results, the survey reveals important imbalances that exist between the different levels of income and wealth in the country. For example, continuing with the example of housing, the Bank of Spain points out that among the 20% of households with the lowest income, the level of ownership of the home is 58.9%, almost 30 points less than in the 10% more rich. It can also be seen in the value of these properties, the average for the most vulnerable households is 79,400 euros, while it amounts to more than 238,000 euros for those with the highest income.

The Bank of Spain points out that the levels of inequality are, in reality, more limited than in other countries of the European Union. This is fundamentally due to the level of ownership of the home in Spain. Although, this reality also reveals great differences. For example, a household located among the 20% with the lowest incomes has 73.4% of its total real assets in its home. In comparison, in the richest 10% it accounts for just 37%, surpassed by other real estate.

This is also found in debts. The main debt of households is, without a doubt, the mortgage for the main home, but the percentage of weight among the different types of families is evident. For example, two out of every three euros of debt that households that are among the 40% with the lowest income have go to mortgages. The percentage falls to less than half among those with higher incomes. At the same time, households with lower incomes also have a much higher level of indebtedness for loans linked to consumption, such as credit cards. The percentage of the total is almost double that of those with higher incomes.

Other data that emerge from this survey is the percentage of income held by those who receive the highest. Thus, the 10% with the highest income receives 32% of the total, the 5% with the most income has 21.7% of the total and, if only 1% is taken into account, it reaches 8.6% of all the income of the country. The difference is even more evident when what is looked at is not income but wealth. In this case, the richest 10% have 54% of the country's wealth. The richest 5% harvest 41%. And the richest 1% of the country retains 22% of the total. These three factors have not stopped growing since the survey began in 2002.

It is also verified that beyond the differences between the volume of wealth that exists between the households that have the least and those that have the most, there is also a clear distance in where they have that wealth. For example, for the least wealthy 50% of households, 64% of their wealth is in the main home. This contributes, however, less than 22% to the richest 10%. Investments, whether in mutual funds, in unlisted companies or in those that do operate on the Stock Exchange, account for almost half of the wealth of these households.

The results, as previously stated, have been somewhat delayed by the annual lag and the large number of events in recent months. However, they draw a scenario in which a part of the population maintains problems of financial vulnerability. In the three years before the pandemic, little progress was made in reducing the debt burden of households. This term refers to the percentage of income that is used to pay debts. When this percentage rises above 40%, it is considered to be a vulnerable household. The survey highlights the growth that has occurred among the 20% of households with the lowest income. Around 15% of the total exceeds that 40% barrier, compared to less than 10% three years earlier. Significant growth can also be seen among households under 35 years of age, where the head of the family is unemployed, or among the 25% of households with the least wealth. It should be noted that these are the households most exposed to the rise in interest rates that was announced a week ago, since they will have to allocate a greater part of their income to pay off debts.

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