Half of young adults are buying luxury goods because they still live rent-free with parents.
The shock findings come in a new research note from Morgan Stanley on the strength being enjoyed by the luxury retail segment, which detailed the quantity of “kids” in the United States and the United Kingdom that are still living at home.
“When young adults free up their budget for daily necessities (e.g. rent and grocery), they simply have more disposable income to be allocated to discretionary spending,” Morgan Stanley analysts said in the report.
In the U.S., 48% of those between the ages of 18 and 29 are living at home, while in the U.K., 42% of those between the ages of 15 and 34 are doing so, according to the report.
That figure for the U.S. is the highest since 1940, while that for the U.K. is the highest in the 25 years of data published by Morgan Stanley — and up from 36% in 1996, per the report.
The report attributes this trend to young people in these countries pursuing higher education, delaying getting married, wanting to save money and being unable to afford rent.
At the same time, there has been “very significant” growth in sales of luxury goods in the West over the last three to five years, the report said.
This is due in part to a broadening of the total addressable market (TAM) for these goods in the West, which includes a growing number of younger buyers — among them those living with their parents.
“This is of course not the only…
