Research indicates that by 2025, 60% of 20 to 39 year olds in England will be renting, while only 26% will have purchased their own home.
The report by PwC, which expands on the summer analysis of the housing market, says “generation rent” will find it hard to buy, and the age of first time buyers is likely to be older than previous generations. Rising interest rates, deposits and high prices will deter young adults from buying.
The biggest change is thought to be with 25 to 34 year olds. By 2025, two-thirds of this age group are believed to be in rented accommodation, compared with 48% in 2013. In ten years time, a third of those aged between 35 and 44 will be renting, compared with 24% in 2013. In the 45 to 54 year old age bracket, the figures will rise from 15% to 21%.
By 2025, only 26% of 20-39 year olds will own their own home, down from 38% in 2013.
The PwC have stated that older generations will be insulated from this trend, as they will benefit from their current properties rise in value. Approximately 75% of over 55s own their own property, the PwC does not see this figure changing drastically in 10 years time.
Senior economist at PwC, Richard Snook, said the report highlighted what difficulties young people face when trying to get on the housing ladder. He said the rise in house prices far outweighs the generations’ average wage increase, this has changed the way people live. He said that policy needed to adapt to the change in tenures.
Snook said: “This could include encouraging a better quality of private rented accommodation including longer tenure periods, and more rental properties designed for families. Demand for housing in the UK has outstripped supply for more than two decades. Changing the outlook for generation rent will require us to build more houses than needed just to match population growth in order to make up the past shortfall between housing supply and growth in demand.”