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Sunday, 21 September 2014

Young people coping with cost of living by staying with their parents

The number of young people aged between 20 and 34 who still live with their parents has grown by 20 per cent since 1997, fuelling fears about the reflection this has on their finances.

Nearly three million young adults were living in the family home in 2011, an increase of almost half a million over the previous 14 years, despite the number in this age group remaining largely unchanged, the Office for National Statistics (ONS) said.

Men are more likely than women to have not yet flown the nest, with around 1.8 million men (one in three) and 1.1 million women (one in six) aged between 20 and 34 still living at home last year.

The figures raised fears that home ownership has simply become “out of reach” for many young people, with a tough jobs market making the struggle to get on the property ladder even tougher.

According to the Council of Mortgage Lenders (CML), the average first-time buyer property cost £44,000 in 1997 and by 2011 it was around three times as much, at £132,000.

Meanwhile Standard Life has found that 62 per cent of parents are planning to give their adult children more financial help than they received themselves due to university fees, high living costs, debts and house deposits, averaging a total bill of more than £15,000 per child.

Would-be buyers have struggled to raise the 20 per cent deposit often demanded by lenders, which led to a boom in the rental sector last year as rents soared, which will also have left many young people unable to leave home. They face a tougher time trying to raise a mortgage in the coming months as lenders are tightening their borrowing criteria and increasing rates.

Prospective buyers were dealt another blow when a two-year stamp duty concession for first-time buyers ended in March this year.

However, the Government recently launched its NewBuy scheme to help those who have been shut out of the housing market, which could help as many as 100,000 people buy a new-build home with a deposit of five per cent or 10 per cent.

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