"The housing crisis is complex and is forcing difficult choices on families, distorting places, and hampering growth."
Almost half (46%) of all 25-year-olds owned their home 20 years ago, compared to just 20% today.
With access to housing to buy increasingly limited to future generations, the LGA says homes for affordable or social rent are vital to help more families afford to save up for a deposit to buy a home.
Analysis for the LGA by estate agents Savills shows that on average, private renters now pay 34% of their total household income on rent and social and affordable renters pay 29%. This rises to 51.5% of incomes for private renters when deducting state financial support, and 41.7% for social renters.
In comparison, homeowners pay an average of 18% of their total household income on their mortgage.
However average house prices are now at 7.9 times average earnings and as a result the average size of a deposit is 62% of annual incomes, rising to 131% in London.
The LGA had previously found that a minimum of 3.98 million working people will need access to some type of affordable housing even if the country achieves full employment by 2024.
Alongside building more social rented homes to boost home ownership, and a renewed effort to increase the incomes of those in need of affordable homes, council leaders say there is also an urgent need to better provide housing for older people.
Between 2008 and 2039, 74% of projected household growth will be made up of households with someone aged 65 or older.
Cllr Martin Tett, LGA housing spokesman, said: "Our figures show just how wide the generational home ownership gap is in this country. A shortage of houses is a top concern for people as homes are too often unavailable, unaffordable and not appropriate for the different needs in our communities.
"The housing crisis is complex and is forcing difficult choices on families, distorting places, and hampering growth. But there is a huge opportunity, as investment in building the right homes in the right places has massive wider benefits for people and places.
"There is no silver bullet and everyone must come together to meet the diverse housing needs in our villages, towns and cities. The Government's Housing White Paper is an opportunity to boost housing supply and affordability. It must recognise that a renaissance in housebuilding by councils will be crucial to helping ensure the mix of homes to rent and buy that are affordable for those people that need them.
"This means powers and funding given to councils to replace sold homes and reinvest in building more of the genuinely affordable homes our communities desperately need.
"But our focus is beyond just bricks and mortar. The Housing Commission sets out how council housebuilding can help deliver homes but also help families boost their household incomes, create prosperous and successful places, and improve the health and quality of life for our ageing population."
