Money

Young Brits spend less on clothes, hotels and restaurants as housing costs rise, research shows

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Brits under the age of 30 are spending less for "fun" than they did in 2001, according to researchers.

A report published Thursday Resolution Foundation, a U.K.-based think tank, found that young adults' real-terms spending on non-essentials dropped by 7% between 2001 and 2018. Meanwhile, 50 to 64-year-olds' leisure spending rose by 11%, and people over the age of 65 spent 37% more.

The spending data analyzed in the report came from the U.K.'s Office of National Statistics' Living Costs and Food Survey, which has been recording Britain's expenditure habits since 1957. It surveys approximately 6,000 households per year.

The data showed that 18 to 29-year-olds were now spending slightly less on recreation, culture, restaurants and hotels than those aged over 65, reflecting a shift in lifestyle and purchasing power differences between generations. Back in 2001, adults under the age of 30 were spending 23% more on those things than people over the age of 65.

Median non-essential spending among 18 to 29-year-olds fell by 1% between 2016 and 2018, the report showed, with young adults spending less on clothing, recreation, culture, restaurants and hotels in 2018 than they did in 2001.

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"Overall, these changes in what people spend their money on support the conclusion that the 21st century has been characterised by a squeeze on spending – especially spending that is discretionary, or just plain 'fun' – for millennial and Generation X cohorts," the report's authors said.

The report also looked into home ownership gaps between generations. It noted that home ownership among young adults in the U.K. was just beginning to recover from a decline that dated back to the late 1980s – but researchers said high house prices were still looming over the youngest generations.

Young households' home ownership rates increased from 7.9% in 2016 to 9.2% in 2018, but researchers noted that "it would be wrong to hail this uptick as the end of the home ownership challenge for generation X and the millennials."

According to official government data, the average price of a house in the U.K. is £228,903 ($289,680) – marking a rise of 1.4% between 2018 and 2019. In London, the average cost of a home is £471,504.

Decreasing spending power isn't just a problem for young people in the U.K. – at the end of last year, a study from the U.S. Federal Reserve concluded that American millennials were spending less than older generations simply because they had less money.

Meanwhile, a study published in May by Charles Schwab found that almost two-thirds of U.S. millennials were living paycheck to paycheck, with only 38% saying they felt financially stable.

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