Young people whose parents own a property are three times more likely to be homeowners themselves by the age of 30, a new study has revealed.
According to think tank, the Resolution Foundation, factors such as young people’s increasing reliance on the Bank of Mum and Dad are helping to drive this trend.
If found in the mid-1990s and early 2000s parental property wealth was not such an influential factor on whether an under-30 would get onto the housing ladder. In fact, it meant they were twice as likely to become homeowners if their parents also owned their home.
Since then, the gap has widened. The report found parental wealth had become such a significant driver of young people’s homeownership prospects, nearly catching up with more obvious influences such as earnings.
Bank of Mum and Dad
Stephen Clarke, senior economic analyst at the Resolution Foundation, said high house prices and sluggish wage growth meant being able to buy a home of their own was almost as impossible for many young people without access to the Bank of Mum and Dad.
“In fact,” he added, “our housing crisis is so big that what your parents own is becoming as important as how much you earn when it comes to owning your own home.
“This is particularly worrying for the one in two millennials who aren’t homeowners and whose parents also aren’t either.”
The report, titled House of the Rising Son (or Daughter), noted other factors connected to parental wealth – such as having a degree – could also affect homeownership.
But it said that even accounting for educational and pay benefits, access to the Bank of Mum and Dad was independently driving up young people’s home ownership.
The Resolution Foundation warned that while it was natural for parents to want to help their children buy a property, it was not the answer for all first-time buyers because half of millennials who were not homeowners did not have parents with property wealth.
Social mobility
It said having a society in which young people’s housing aspirations were so dependent on what their parents owned was ‘undesirable’.
It said politicians who wanted social mobility should focus on wealth not just income and called on policy makers to be more radical when it came to finding solutions to help young people become homeowners.
Clarke added: “These findings reinforce the need to think more broadly about what the barriers to social mobility are in 21st Century Britain.
“We’ve always known that who your parents are affects what education you get and job you do. But increasingly the effect is continuing later into life determining whether you own a home of your own.”
