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Official figures from the Office for National Statistics show that there are now more adults living with their parents than at any time on record. Over £3.3 million people aged 20 to 34 are living with their parents, compared to just over £2.6 million in 1996.
At present, 20% of all 25 to 29 year olds are living with their parents, and 10% of those aged between 30 and 34 have failed to fly the nest.
The number of young adults living with their parents has hit a 20-year high as millions struggle to buy their own homes. The figures from the ONS reveal that young men were more likely to live with their parents. One in three men aged between 20-to-34 were in this category, compared to one in five women. Women are more likely to be in a relationship with older partners, the ONS figures suggested, so more women aged 20 to 34 are likely to be living in a couple compared to men.
The rise in the number of adults still living at home is due to a combination of higher deposits, stricter lending criteria and longer higher education courses. It is now much more common for people leaving home to rent rather than buy. In fact, in 2015 just over 91% of householders aged 20 to 24 were renting compared to 30 per cent of those aged 20 to 24 becoming homeowners in 1996.
Those who attend university are graduating with a larger amount of debt than ever before and they are struggling to get onto the housing ladder because of it. By contrast, relaxed pension rules have made it easier for parents to withdraw large windfall sums, so even when people do buy their own home they are often relying on the bank of mum and dad.
For those who aren’t so lucky, finding a large deposit is a huge hurdle in buying a property. First-time deposits have increased from around 10 per cent of the purchase price in 1996 to 22% today. High rents have preventing people from saving for a deposit so the answer is often to live with their parents and save for a first-time deposit.
Another factor is stagnant wages alongside strong property prices. Between 1971 and 1999 the amount paid for a house by first-time buyers with a mortgage was around three times their annual income. In recent years this ratio rapidly increased, driven by soaring house prices, reaching a peak of more than 4.5 times annual incomes in 2004 and remaining stable since then.
Two years ago, the average property price was 11 times gross annual pay for those aged 22 to 29 year olds, and the average house price for first-time buyers was nine times average annual pay for 22 to 29 year olds. Therefore the house prices haven’t increased in line with the rise in salaries.
Compared to twenty years ago, young people are getting married later, and this is driving up the age at which they leave home.
If you are still living at home and are concerned that you won’t be able to afford a property, talk to us at Derngate Wealth today. We can help you to budget and plan for the future.