January 21, 2014 5:06 pm

Housing market hit as young adults stay in parental nest

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The growing number of young adults still in the parental nest has had knock-on effects for the economy as a whole.

The clearest link is with the housing market, where the sudden increase in the average age of first-time buyers since the crash has contributed to a sharp fall in the overall flow of new buyers. Economists think the government’s Help to Buy scheme of mortgage guarantees – in part an attempt to help young people to buy sooner – has helped to unfreeze the market, albeit at the cost of pushing prices higher.

Delayed independence is showing up in other ways too. Data show young people are buying fewer cars and driving less, which academics think is linked to the fact they are staying at home for longer, starting families later and rising insurance costs.

Data from the Department for Transport show the number of 17- to 19-year olds taking their practical driving tests has dropped about 18 per cent since 2007. Those who do have cars appear to be driving fewer miles each week, with a more pronounced decline among young men than young women. Car companies have tried to adapt by embracing car-sharing schemes and by marketing harder to older people.

Nightclubs have been another casualty, with several chains falling into administration as a result of a fall in the spending power of their core customers.

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