Early 1990s 'baby busters' in the Midlands, the generation of students just starting at University, will be forced to rent rather than buy property for longer than they expect, according to a new PwC report out today.

Only able to buy their first house aged around 35, encumbered with student debt of around £90,000 and with significantly less generous pensions than their parents' generation: this is the legacy handed down by the early 1960s 'baby boomers' to the early 1990s 'baby busters'.

On the other hand, the report notes that the baby busters are likely to live longer than their parents and to have higher absolute levels of consumption due to being born into a richer society after 30 years of technological progress and economic growth between the early 1960s and early 1990s.

The report, 'Broken toys: what legacy will the baby boomer generation leave to the baby busters?', reveals stark differences in the economic fortunes of people with similar career paths and life histories from different generations. It says that, relative to average earnings in society at the time, the baby buster generation could be around 25% less wealthy at age 65 than the baby boomers in terms of total accumulated housing, pension and other financial wealth.

The report looks at the hypothetical lives of two men, the first born in 1963, the second in 1993. They have very similar careers as NHS doctors and make very similar life choices in relation to marriage and children, but accumulate very different levels of lifetime housing, pension and other financial wealth.

At age 65, the baby buster's total wealth is projected to be higher, in absolute terms, at around £1.9 million, compared with the baby boomer's at around £1.6 million, which simply reflects projected real growth in the economy between 2028 and 2058. But relative to average earnings in society at those two dates, the baby buster's comparative wealth is around 25% lower than that of the baby boomer.

Matthew Hammond, partner at PwC in the Midlands, said:

"Our report shows that, relative to living standards in society at the time, the baby buster generation may end up being up to 25% worse off than their parents in terms of accumulated total wealth at age 65 - even if the volume and variety of goods and services available to the baby busters is greater than for earlier generations due to being born into a richer society with more advanced technologies.

"Since academic research suggests that perceived happiness may be related more to relative than absolute consumption, there is an important sense in which the baby busters could be said to be significantly less well off than the baby boomers given the financial headwinds the baby busters face from student debt, less generous pensions and probably less buoyant housing and equity markets than we have seen on average during the past three decades.

"On the other hand, the baby busters are expected to live around 5 years longer on average than their predecessors and could in some cases benefit from significant inheritances from their baby boomer parents, assuming this excess wealth does not get eaten up in long term care costs.

"While the kind of hypothetical life stories we present here can never be statistically representative, the analysis does provide an illustration of how big the generational wealth gap could be in relative terms. Furthermore, the differences may be even more marked for people with less well-remunerated careers than NHS doctors."

One of the areas where the baby busters are likely to be most adversely affected is their ability to get on the 'property ladder'.

Alistair Reason, real estate expert at PwC in the Midlands, said:

"There is no doubt that times are changing for the next generation. Getting a foot on the housing ladder is a distant dream for many, and is set to become even more so for the baby busters, who face leaving university with significant debt.

"Even with a well-paid job, the reality of life ahead is that paying down the debt will make saving for a deposit so difficult that it will be almost impossible for them to think about buying a property for many years, if not decades. They may be 'Generation Rent' for much longer than they expect.

"Growing up in a baby boomer home will have raised their expectations of the standard of property they should live in. They won't be satisfied with renting second-class property and will need good quality housing stock.

"The supply of good quality property will only increase if the Government creates a framework that will attract more large-scale investors into this market. Change will not happen overnight. Tax measures are expected in the Autumn Statement and, if effective, these could revolutionise our culture with the result that renting becomes an acceptable norm rather than an unwanted necessity."

The report considers various other policy solutions that could redress the imbalance in wealth between the different generations. Such measures might include, for example, raising the state pension age further for the baby boomers or increasing the taxation of baby boomer housing wealth (so allowing lower taxation of the future incomes of the baby busters). But making more affordable and better quality rented housing available for the baby busters seems likely to be a much more politically attractive solution.