Record numbers of young people still live with their parents as the so-called boomerang generation struggle to buy their own homes.
The young were hit harder by the recession than older people – being more likely to lose their jobs and suffering larger reductions in their incomes, a report says.
The Institute for Fiscal Studies report, which is published today, also found that more than one in four 22 to 30-year-olds depend on their parents for somewhere to live.
It exposed the staggering decline in home ownership among younger people compared to their parents at the same age. The proportion owning a home has halved in 20 years.
Jonathan Cribb, a research economist at the IFS, said: ‘Young adults have borne the brunt of the recession.
‘Pay, employment and incomes have all been hit hardest for those in their 20s. A crucial question is whether this difficult start will do lasting damage to their employment and earning prospects.’
Among those born in the Sixties, 45 per cent owned a house by the time they were 25. That compares with 34 per cent born in the mid-Seventies and just 21 per cent of those born in the mid-Eighties.
During the recession, 22 to 30-year-olds saw their incomes fall sharply. On average they experienced a dip in wages of 13 per cent from 2007 to last year.
Among 31 to 59-year-olds, the fall was only 7 per cent. For the over-60s, average household income remained unchanged – in many cases because pensions and benefits were not cut in the same way as wages.
In the same period, employment among the young fell by 4 per cent, while remaining stable for older workers.
The report found that being able to live at home cushioned the blow of the recession for young people as they would have suffered more financially if they did not have that option. Notably, it also found there was ‘no clear North-South divide’ in terms of where the recession hit hardest.
The figures counter Labour’s oft-repeated claim that those outside London are worse off than those in the capital.
Angus Hanton, of the non-party political charity Intergenerational Foundation, said: ‘That so many young people cannot afford to leave home should act as a wake-up call to policymakers.
‘These figures provide yet further evidence that the prospects of younger generations are being systematically sacrificed whilst older generations’ benefits continue to be protected. Why? Because more older people vote and they lobby
hard for their own interests.’
The report prompted calls for ministers to increase home building across the country.
Chris Goulden, head of poverty research at the Joseph Rowntree Foundation, said: ‘This research provides further proof that a shortage of affordable homes and the high cost of renting or buying a home is pushing hundreds of thousands more people into absolute poverty.’
Labour treasury spokesman Catherine McKinnell said: ‘While David Cameron denies there is a cost-of-living crisis, these figures show people have seen a substantial fall in their income.
‘With home ownership becoming ever more out of reach for young people, we need action to boost housing supply.’
However, Professor Frank Furedi of the University of Kent denies the report’s finding that the trend of young adults living with their parents is linked to the economy – saying it had been a growing shift even in the good years.
He said young adults are being ‘treated childishly’, adding that parents are ‘allowing young people to remain in extended adolescence’ instead of forcing them to make their own way in life.