Why are more young people living with their parents?

Young adults (aged 20 to 34) in the UK are more likely to be sharing a home with their parents than any time since 1996.¹

There were 618,000 more young adults living with their parents in 2015 than in 1996 - 3.3 million compared with 2.7 million.

The UK Government says it wants to increase the accessibility of affordable housing for young people², while other political parties, including the Opposition, have also raised the issue.

Around one in four young adults lived with their parents in 2015.

Nearly half of 20 to 24 year olds lived with their parents in 2015, compared with a fifth of 25 to 29 year olds. For 30 to 34 year olds, this figure was less than one in 10.

Number of young adults aged 20 to 34 living with their parents, UK, 1996 to 2015

So what could be driving these trends?

Decline in home ownership among young adults

The percentage of young adult householders³ owning their home decreased from 55% in 1996 to 30% in 2015 for 25 to 29 year olds; and from 68% to 46% for 30 to 34 year olds.

Percentage of 25 to 34 year old householders owning or renting⁴, UK, 1996 to 2015

The percentage of 25 to 34 year old householders renting their home has surpassed those who own their homes over the last decade. There has been a noticeable increase in renting since the early 2000s. This may be due to increased demand for rented housing as house prices increase and an increased supply of privately rented housing from a growing number of buy-to-let investors.

The increase in renting has been largest for householders who are aged 20 to 24.

In 2015, 91% of householders aged 20 to 24 were living in rented accommodation; this is higher than all other age groups.

Only 9% of 20 to 24 year old householders owned their homes either outright or with a mortgage or loan in 2015, down from 30% in 1996.

Percentage of 20 to 24 year old householders owning or renting, UK, 1996 to 2015

Increased deposits needed to buy a home

Saving for a deposit is often seen as one of the biggest hurdles to home ownership.

First time buyers' deposits have increased from around 10% of the purchase price in 1996, to a peak of 27% in 2009. This was the height of the economic downturn, when mortgage lenders placed greater restrictions on the mortgage lending criteria used to assess applicants’ ability to afford a home loan.

In recent years the size of deposits paid has fallen slightly but remained above 20% of the purchase price on average.

The size of deposits paid by first time buyers has risen more than deposits paid by existing homeowners. This is because prospective first time buyers who have smaller deposits saved were less likely to be approved for a mortgage, and therefore less likely to buy a home. That left only those with larger deposits who did buy their first home, which in turn pushed up the average deposit paid.

Deposit as percentage of purchase price, UK, 1996 to 2014

First time buyers are spending more on houses relative to their income

Between 1971 and 1999, the amount paid for a house by first time buyers with a mortgage fluctuated between two and three times their annual income. After 2000, this ratio increased rapidly, driven by increasing house prices, reaching a peak of more than 4.5 times their annual income in 2004 and has remained fairly stable since then.

Ratio of price paid to income of borrower for first time buyers, UK, 1971 to 2014

This analysis is based on people who have successfully purchased their first home. There are many young adults for whom properties at the bottom end of the market are unaffordable.

In 2014 median house prices⁵ (all dwellings) were 11 times median gross annual pay for 22 to 29 year olds, while median house prices for first time buyers were nine times median gross annual pay for 22 to 29 year olds.^{6^,^7}

While house prices have generally risen recently, they have not always been matched with increases in earnings.

In 2013 the real earnings (adjusted for inflation) of people in their 20s were 12% lower on average than those in their 20s in 2009.⁸ Young adults also have higher rates of unemployment.⁹

First time buyer numbers on the rise again

Number of mortgage loans for first time buyers, UK, 1980 to 2014

Between 1980 and 2002, there were on average 486,000¹⁰ mortgages issued to first time buyers per year, although this fluctuated over the time period. After 2002 the number of mortgage loans to first time buyers dropped substantially. Since 2012 there has been some recovery but the level still remains below the average seen prior to 2003.

Men more likely than women to live with their parents

Men aged 20 to 34 were more likely to be living with their parents than women.

60% of 20 to 34 year olds living with their parents were male in 2015, that is almost 1 in 3 (31%) men aged 20 to 34 compared to one in five women.

In addition to financial reasons, what are some of the other factors that may affect the number of young adults living at home?

Delays in formalising relationships

The formalisation of relationships (getting married, forming a civil partnership or cohabiting with a partner) is occurring at older ages. The average age at first marriage¹¹ for men in England and Wales was 32 years in 2012 compared with 29 years in 1996. For women, the average age at first marriage in 2012 was slightly lower than for men (30 years), but was still higher than the average age for women 16 years earlier (27 years).

Women are more likely to form relationships with older partners so more women aged 20 to 34 are likely to be living in a couple compared to men. In the 20 to 34 age group, over 620,000 more women than men were living as part of a couple in their own household in 2015.

Women now have more choice over when, or whether, to have children. The average age for women in England and Wales to have their first birth¹² was 29 years in 2014 compared with 27 years in 1996. In the past having children earlier may have been a driver for young adults to leave the parental home at a younger age.

Lone parents and concealed families

Young women are more likely to become a lone parent when a relationship breaks down. In the 20 to 34 age group, there were more than 551,000 more female lone parents compared to male lone parents in 2015.

Lone mothers or fathers may live independently or choose to stay living with their parents, forming ‘concealed families’ ¹³ within the parental home. These young adults have not been included in the count of young adults living with their parents for this analysis. By excluding concealed families, the total number of young adults living with their parents is lowered. This tends to affect the numbers of young women more than young men living with their parents as women are more likely to be caring for children and therefore form a concealed family.

Housing benefit- changes to welfare

The recent changes to housing benefit entitlement¹⁴ for those aged under 35 is also likely to have had some impact on young adults being able to leave the parental home. Research suggests that this is more likely to affect young males, particularly non-resident fathers, than young females.¹⁵ This is because non-resident fathers by definition won’t have their children living with them and so are only entitled to the costs of living in a room in a shared house; this may discourage young males from leaving the parental home or encourage them to move back in with their parents after the breakdown of a relationship.

Staying in education for longer

Increasing numbers of young adults are also choosing to stay in education for longer. In 2015, the number of young adults aged 18 to 24 in full-time education was 1.9 million, an increase of 791,000 (72%) from just over 1.1 million in 1996.¹⁶

Increasing numbers of young adults are also choosing to stay at home while attending university. In 2014, 24% of UK University undergraduates opted to stay at home living with parents whilst studying, compared with 12% in 1996. This may be because these young adults are trying to reduce their living costs while studying at university. Additionally many young adults are choosing to return to their parental home after completing their studies.

Further research on the impact of the housing market, welfare changes and housing policy on young adults leaving home can be found in analysis such as 'Young Adults’ Transitions to Residential Independence in the UK: The Role of Social and Housing Policy’ by Berrington and colleagues.

For more information on housing data e-mail hpi@ons.gov.uk and for more information on the living arrangements of younger people e-mail families@ons.gov.uk

Footnotes:

1. Before 1996 the LFS household dataset was not available.
2. David Cameron's 2015 Conservative Party Conference speech in October
3. Household reference person (Labour Force Survey definition) The household reference person is the householder, which is the household member who owns the accommodation; or is legally responsible for the rent; or occupies the accommodation as reward of their employment, or through some relationship to its owner who is not a member of the household. If there are joint householders, the one with the highest income is the household reference person. If their income is the same, then the eldest one is the household reference person.
4. Renting refers to both private and social rented accommodation.
5. The median is the mid-point at which 50% of house prices are higher and 50% are lower.
6. ONS (2015) Annual Survey for Hours and Earnings
7. ONS (2015) House Price Index - Annual Tables 20-39, November 2015
8. ONS (2014) UK Wages Over the Past Four Decades - 2014
9. House of Commons Library (2016) Youth Unemployment Statistics
10. Council of Mortgage Lenders (2016) Table ML2 First-time buyers, new mortgages and affordability
11. ONS (2014) Marriages in England and Wales (Provisional), 2012
12. ONS (2015) Births by Parents' Characteristics in England and Wales, 2014
13. A concealed family is a family living in a multi-family household in addition to the primary family, such as a young mother living with her parents. These families are not included within the number of young adults living with their parents presented here.
14. GOV.UK (2016) Housing Benefit
15. Centre for Population Change (2016) Outlining a future research agenda for studies of young adults’ transitions to residential independence
16. ONS (2016)Labour Market Statistics, January 2016. Table A06 SA.