A new survey by the Post Office has revealed that only 59% of parents are able to provide financial support towards helping their child get on the property ladder.
According to the report using data from Opinium Research and the Office for National Statistics, the parents of millennials have an average financial wealth of £52,746 (£70,704 in London).
If they choose to assist their child’s home purchase, on average they can afford to use a third (35%) of this wealth – equivalent to £18,396.
Parents are making contributions in a variety of other ways including letting their children live at home for free (43%), charging reduced rent (25%) and (15%) providing free childcare.
Four in five (81%) parents surveyed are more than happy to provide financial support if they can. However, many parents do not feel they can provide their children with financial help.
Only one in 20 can afford the £50,000 needed for the average UK, while 7% felt guilty that they were not able to provide financial support for their children.
Of those that have provided financial assistance to their children 59% gifted the support and 40% loaned the money.
Given that 95% of parents are unable to provide a full deposit and that millennials can only afford to save 7% of their income towards a deposit the average deposit could take 18 years to save for.
As a result it’s no surprise that 43% of millennials who don’t think they’ll be able to afford home feel it is because they won’t be able to afford a deposit in the near future.
Of those that do aspire to own their own home 58% are planning to use their personal savings, with 22% hoping for some form of financial assistance from their family.
Parental support can significantly reduce the average amount of time millennials can expect to save for a deposit.
Outside of London and the South, parental assistance can help reduce the time it takes to save for a deposit by more than half. In London and the South, it’s apparent that homeownership is only possible either much later in life when incomes are higher, or with above average parental help.
Owen Woodley, managing director, Post Office Money, said: “Our research found that millennials can, on average, only save 7% of their income towards a deposit which, given high cost of homes in the UK, is leaving many chasing a dream but struggling to realise it.
“For reasons beyond their control, the vast majority of the younger generation will need help and we can see that parents are doing all they can to support their children. 59% of parents we spoke to are able to make a financial contribution and many supported their children’s saving in other ways. However, only five per cent of parents were able to provide the full amount required for a deposit and so first-time buyers are still having to work hard to make their dream a reality.
“We are committed to helping to address these changing needs through developing innovative mortgage solutions for both first time buyers and their parents.”
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