According to a report from the Institute for Fiscal Studies (IFS), between 2006 and 2024, the proportion of 25-34-year-olds living with their parents has gone up from 13% to 18%, rising to a peak of 21% during the pandemic.
Those aged 25-29 years old have risen from 20% to 28% from 2006 to 2024, while for those aged 30-34 years old, things have changed little.
The report found that living with parents is more common among men, those on lower incomes and those from Bangladeshi backgrounds, with the latter going up from 28% in 2006 to 41% in 2024.
The IFS said that 25-34-year-olds as a group are more ethnically diverse and less likely to be married or to have children than 2006, but this explains only a tenth of the rise.
Declining housing affordability explains the rise in young adults living with their parents. The largest increases are in the South West and the East of England, where they increased by 58% and 56% respectively.
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The IFS said that saving on rent allows young people to accumulate savings, reduce debts or increase spending. The report noted that those living with parents would pay around £560 per month if they privately rented, going up to £1,000 per month in London.
Around 14% of young adults living with their parents save over £10,000 in net financial wealth in two years, which is more than a third higher than young adults privately renting.
However, the IFS said that those living with their parents are more likely to see large declines in net wealth.
The report said this shows that the “option to live at home is likely functioning as a safety net for some experiencing adverse events as well as enabling some young adults to save more”.
Bee Boileau, research economist at IFS and an author of the report, said: “In the last decade and a half, there has been a substantial increase in the proportion of young adults living with their parents. This has occurred alongside – and indeed has been fuelled by – increases in rents and house prices.
“For some, living with parents provides an opportunity to build up savings more quickly than if they were renting – which is an especially valuable advantage in high-cost places like London. However, others are likely to be living at a parental home due to a bad shock of some kind – such as the end of a relationship or a redundancy – or simply because they cannot afford to live independently.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Nearly half a million more young people living with parents since 2006, IFS says
