Expand their household includes cohabitation and marriage. So 60%, the majority still have plans to procreate and the other 40% might change their minds if economic conditions improve or accidentally get pregnant.
Didn't we do this with the bedroom tax?
True. But forcing them to build is going to be difficult job.
We can also incentivise people to move and downsize.
It doesn't have to be a binary choice.
Cohabitation ? Why do 2 young people living together need more than one bedroom. As regards the numbers, however unlikely, the whole other 60% could be undecided, it doesn't say.
Look we can go around in pointless circles with this, but people will downsize if and when they want. They have worked, paid their money and earned the right to stay in their "oversized" houses for as long as they like. If they want to spend their last mortal days there and be carried out in a coffin its nobody else's business than that of the individual.
The house will be available at that point for a family, assuming they can afford it, to do as they want.
Supply and demand set the price, if people start downsizing, the price of starter properties will increase making them even more unaffordable for people earlier in their career on smaller salaries and the larger properties wont get significantly cheaper as they will always command a higher price than that of a smaller property in a given area.
The only workable solutions are:
To build more houses and prevent people and companies buying them off plan to rent out.
Having some form of tax relief for young families related to mortgage payments.
The latter however is likely to cause consternation with people who maybe cant have children or dont want them.
I have a son who is 20. I know and he knows its going to be difficult to get on the housing ladder but thats just the reality of the world we live in and is also true across most of northern Europe. Trying to unpick years of insufficient house building and pretty much free money could take 10 maybe 20 years or even more.