Almost A Third of All Spending By Under-30s Goes On Housing

Housing accounts for almost a third of all spending in households headed by someone under 30, compared to less than 20 per cent for those aged 50 to 74, the Resolution Foundation said in response to the latest Office National Statistics (ONS) Family Spending Survey published recently.

The RF analysis of the latest ONS figures shows that:

• The essentials of housing and food account for 43% of spending among the poorest fifth of households, compared with 29% among richest fifth.
• Despite having disposable incomes more than six times higher than those in the poorest 20%, the richest fifth of households only spend just over three times as much.

This ratio drops to just 1.6 in relation to food & drink and 2.6 in relation to housing (even after accounting for Housing Benefit). But higher income households spend significantly more on household goods (4.1 times as much), recreation and leisure (4.5) and transport (4.9). 

Matthew Whittaker, Chief Economist of the Resolution Foundation said:

“Given the scale of the income gap that exists between the richest and poorest households in the country, it will strike many as surprising that the top fifth only spend a little over three times as much as the bottom fifth.

“This reflects the unavoidable and sizeable costs associated with housing and food that all households face. As a result, poorer households spend a much higher share of their income overall and allocate far more of their spending to these essentials.

“The picture is more complicated across age groups. But housing expenditure weighs heaviest at younger ages, with the under-30s directing almost a third of their overall spending towards property.

“These spending patterns show that for many low-to-middle households, as well as young people, the cost of housing is as big a driver of living standards as wages.

“They also have important implications for how households experience inflation. Disproportionate increases in the costs of many essentials over the last decade or so have meant lower-income households facing higher inflation levels than the headline rate – compounding the squeeze on their incomes.”

“Today’s findings remind us again of the importance of moving beyond an over-reliance on a single headline measure of inflation when measuring living standards.”

Breakdown of household expenditure by age group