Drivers: what’s happening
Gen Z faces the biggest gap of any generation between housing aspiration and reality, but most still want to buy. Housing prices have soared, and are expected to keep rising in 2025. In the EU, house prices have increased, outpacing inflation and making housing the largest household expense. In the United Kingdom, average house prices have surged by 11% over the past year, reaching £282,573, making homeownership increasingly unattainable. Rising interest rates are also contributing to increasing mortgage prices. Gen Z homebuyers are grappling with mortgage repayments double the rates previous generations paid. All these factors combined drive Gen Z to live longer with their parents than the generations before them.
The numbers
81% of Gen Z and 93% of Millennials would choose to buy a home if they could.
78% of Gen Z expect house prices in their area to increase further in the next ten years.
Source: National Centre for Social Research
In the UK, housing prices have increased 73% over the past decade.
38% of Gen Z feel trapped by financial instability.
Urban shifts
Opting for alternatives
According to Ashley Fell, a social researcher at McCrindle, research is pointing towards younger generations considering other ways of entering the housing market. Young Australians are opting for relocatable homes on wheels. These tiny homes fall under the same legislation as a camper van. Their Gen Z buyers are using their parents’ backyards to set up their new homes.
Opting out
In the United States, the housing market has experienced its lowest turnover rate in at least 30 years in 2024. About 46% of Gen Zers between the ages of 18 and 27 rely on financial assistance from their parents and family. 54% of Gen Zers report they don’t cover their housing expenses. The Bank of America report found that nearly 70% of Gen Zers surveyed are implementing lifestyle changes in response to these shifts. The 26-year-old Joe Cruz interviewed for the Time in July 2024. Cruz works three jobs in Austin. But because of debt and the rising cost of living in Texas, the 26-year-old “moved in with his dad a couple of years ago and has been there since.”
There were 37.5% fewer homes sold this year than during the middle of the pandemic buying frenzy in 2021 (40 of every 1,000) and 31% fewer homes sold than during the last pre-pandemic year in 2019 (36 of every 1,000).
What does it mean for your city?
Short-term rentals and investment purchases drove up housing costs, hitting low-income households and Gen Z the hardest. The younger generation can no longer rent or buy. With the housing crisis reaching a global scale, affordable housing is a top priority for decision-makers in 2025. However, developments targeted at “young adults” may remain vacant. As millennials age out of studio-sized and shared housing, few Gen Zers can afford to take their place.
Strategic opportunity
When developing housing policies, consider the financial, cultural and emotional needs of the younger generation. Ask yourself, "Can they afford this, and would they want to live here?"
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Urban Futures Lab is a strategic urban foresight Think Tank. We decode the forces shaping our cities and industries. We help urban decision-makers, developers, researchers, and anyone curious about the future of urban living discover the interconnected systems driving urban change. Our insights offer a holistic perspective on the future of urban ecosystems, helping you make informed, future-proof decisions.
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