I expect I will just repeat what others have said but...
@Ludoole You don't need a conversation about her you need a conversation about you!
He will join the dots.
It's not complicated to start talking. You might want to say that seeing each other X days a week is all very well, but after 5 years you are wondering if anything will change. Such as living together.
I think it's very sad that his daughter is behaving in what appears to be an entitled way with no regard for her father's own private life and relationships. She does sound spoiled and you perhaps need to look at how he treats her as an example of his own personality.
Is he weak? (generally)
Does he allow others to dominate him?
Is his behaviour towards her compensation for the divorce?
Why did she choose to live with him and not a) her mother or b) in a shared house?
Even if she doesn't want to buy , or is not able to buy, she could rent or chare a house which loads of people in their 20s do.
The thing is, things will change once she finds a partner. Then she'll be off. You and your DP will then be faced with 'what next' for both of you. And how many years might have gone by then?
It looks to me sadly, as if he likes the part-time life he has with you.
If he didn't, he'd be moving things on and there'd be no need for you to start a conversation.
Bluntly, you need to ask him if you are part of his future for the next 30 years and, if so, how is that going to work.
Your options might be an ultimatum and be prepared to walk away.