A million more young people should live with their parents the next decade to save enough for a down payment to buy their own home.
The Aviva insurance company estimates that by 2025 3.8 million people between the ages of 21 and 34 could live in the parental home, compared to 2.8 million in 2015.
Rising house prices made it increasingly difficult for young people to get onto the property ladder, said Aviva, after average house prices in the UK increased by more than 50% to £ 279,000 between 2005 and 2015.
Parents not only have to offer their children a home for longer, but also help with depositing funds.
The ‘mom and dad’ bank will help finance a quarter of all UK mortgage agreements in 2016, with an average contribution of £ 17,500, according to a legal and general report earlier this month.
Parents are donating £ 5 billion in total to help their offspring buy a house this year, estimates L&G.
In the 10 years to 2015, the number of young people living with their parents has increased by nearly 700,000 or 32%, which has changed the composition of British households by making multi-generational living much more common.
Lindsey Rix of Aviva: “Multigenerational living is often seen as a necessity rather than a choice, especially when adults are forced to move back into the family to help save for long-term goals such as buying their own home.
“But instead of inconvenience, our report shows that it is often a positive experience, with shared living costs that reduce the financial burden and the added benefit of constant business.”
When young people were asked by Aviva what might encourage them to stay with their parents or withdraw for six months or more, saving for a house deposit was the second most common reason, namely 57%. The most common answer was taking care of an unwell family member, with 71%.
About 42% of adults said living in a multi-generational household would be a positive arrangement, rising to 66% among those who already live this way.
Respondents to the Aviva survey said that having other people for the company, shared living costs and more people with whom they could share chores were one of the benefits.
About 12% of people living in a multi-generational household said the disadvantages outweigh the benefits compared to 21% of all UK adults.
Rising rents have put pressure on young people who want to buy a house, making more of their wages paid and making it harder to save a down payment. Although 95% mortgages have made a comeback, buyers in parts of the country where prices are high need large deposits to be able to withstand the affordability checks of mortgage lenders.
Figures published by the Office for National Statistics on Friday showed that rents in the UK rose by an average of 2.6% in the 12 months to April, with tenants in London seeing the biggest price increase. The private rental index of the ONS showed that tenants paid more in all parts of the country, with a rent increase of 2.8% in England, 0.2% in Wales and 0.5% in Scotland. Rents in London increased by 3.7% compared to the year.
The think-tank of the Resolution Foundation said that the figures from the ONS showed that rental costs in London had risen by one-fifth in the last five years, while wages had leveled off. Lindsay Judge, senior research and policy analyst at the Resolution Foundation, said: “This is bad news for living standards, bad news for employers and bad news for the wider economy.
“It is a difficult task for the new mayor to take on the affordability of private tenants in London.”