Living with your parents when you’re well into adulthood isn’t everyone’s cup of tea, but it seems more and more young people have to rely on their mum and/or dad for a place to live.
According to recent research by KPMG and Shelter, there are around 3.35 million adults aged 20-34 still living at home with their parents or guardians.
This figure has increased by 25% since 1996 as one in four under-35s struggle to get on to the property ladder. So why are so many young adults struggling to find a home of their own?
House prices on the move
A hot topic in the news recently, ever-increasing house prices seem to be affecting all of us. So it’s no surprise that there’s a higher number of young adults still living in their childhood homes. The initial deposit money required to secure a house for the future can be very expensive and is often unachievable for first-time buyers if they don’t have help.
In the 41 years between 1971 and 2012, property prices saw an increase of 4,268%, according to KPMG and Shelter’s research. When this price increase is applied to everyday food prices, Shelter revealed that a chicken would cost £51.33 in 2012, and four pints of milk would cost £10.48. This would push the price of an average weekly food shop up to over £450. This increase in house prices no doubt makes saving for a home more difficult for first-time buyers.
Buying vs. renting
As many struggle to raise the up-front cash required for a deposit, private rented property can often seem much more appealing than living back at home with the family.
Despite the fact renting property is often more expensive than owning in the long-term, the number of under-35s doing so increased from just over one million in 2000 to nearly two million in 2010, Shelter’s research states.
This increase could signal that lots of young people just don’t feel ready to make a big commitment like buying their own house. Privately renting can sometimes provide more freedom than owning property, as you can move freely and more flexibly – an alluring feature for young people who want to travel the world and make the most of their youth. Or, it could mean many young people struggle to save up for a deposit, as renting costs may leave little room for saving
For those who have the opportunity to do so - and those who don’t want to rent or buy - moving back in with their parents could seem like a cheaper and more sensible option.
However, young people account for only one part of the private rented sector, as there are now more than nine million people renting in four million properties in England alone.
‘The Bank of Mum and Dad’
House prices rising to less affordable sums and travelling ambitions could be prompting an increase in young people being forced to use ‘The Bank of Mum and Dad’. As property prices grow, young adults could find it takes longer to save for a deposit or for their one-way flight tickets, which means they have to find alternative ways to raise the money – such as asking their relatives to foot the bill.
With many parents feeling the pressure yet being financially unable to help, it can become a waiting game where young adults are stuck in limbo living in their childhood home while they wait for funds to become available.
That’s not to say most are standing by idly watching their parents raise the money, as research by KPMG and Shelter suggests 72% of these 20-34 year olds are spending their time at home working.
Saving for a deposit or flight tickets may be a difficult hurdle many young people are struggling to get over, but some adults living with their parents could be doing so just because it’s easy. At home they might have their meals cooked for them, and they might even have their chores done – so it could be a pretty attractive offer if you’re not keen on taking on the responsibility of owning your own place.
Living with your parents could be seen as less stressful than owning your own home, as you don’t have to worry about paying bills or making regular mortgage payments. Some parents may charge board to help pay for everything, but it’s unlikely they’ll charge fees for late or missed payments – so living at home could be seen as a stress-free alternative to renting or buying.
However, living alone also provides the independence you lack when you share your home with your parents once you’re an adult. If you want to have a group of friends round to watch a movie or your girlfriend or boyfriend is visiting, you don’t have to worry about all the other members of your household. It’s your home and you can do what you want – which could make moving out very appealing.
We’re not out of the woods yet…
Even when young people do eventually move out, it still seems that the majority could be struggling to be able to pay for it all themselves, with more and more mums and dads helping to bear the costs of moving.
According to KPMG and Shelter, parents across England are lending and giving their children more than two billion pounds a year to help them get on to the first step of the property ladder. At an average of £17,000, these cash sums being donated to first-time buyers are costly expenses that many parents may have to save for a long time to come up with.
This could eventually lead to houses being reserved for those with the inherited wealth to purchase them, rather than by first-time buyers working hard and saving carefully. The research estimates that a third of home purchases in England and Wales in 2013 were made by cash buyers, instead of those budgeting with a salary and a mortgage.
It’s not all bad news
The government’s Help to Buy scheme was introduced in an attempt to help first-time buyers afford a home, by lowering the initial deposit cost providing people invest in a property included in the scheme. There have been many successful cases using this, as owning a property is made more achievable by a reduced initial cost, which allows buyers to settle in to their new home and begin paying back their mortgage at an affordable rate.
Remember, it’s never too late to start saving for your future! You may be feeling like there’s no hope of you ever getting on to the property ladder - or that travelling and renting along the way could be too expensive - but if you act now and start saving wherever you can; you should have more of a chance to achieve your property goals in the future.
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By Dan Griffiths