The reliance of first-time home-buyers on their parents to acquire houses in the UK have reached a historic high, according to latest research by the Social Mobility Commission. This indicates the growing number of first-time home-buyers, who are unable to buy homes in the wake of price inflation.
“Increasingly, young people are relying on the bank of ‘mum and dad’ to get a foot on the housing ladder. Over a third of first-time buyers in England (34%) now turn to family for a financial gift or loan to help them buy their home compared to 1 in 5 (20%) 7 years ago. A further 1 in 10 rely on inherited wealth,” the Social Mobility Commission said in a release expressing fears over many first-time home-buyers remaining outside the housing network.
An analysis of the government and housing market data conducted by researchers from the University of Cambridge and Anglia Ruskin University revealed that the proportion of young aspiring home-buyers embarking on home ownership has fallen dramatically. For 25- to 29-year-olds, home ownership has fallen by more than half in the last 25 years from 63 per cent in 1990 to 31 per cent most recently. Many of those who do manage to buy eventually can only do so at an older age.
Interestingly, the report also found out that first-time home-buyers who receive monetary help from their parents can buy 2.6 years earlier than those who do not. In London, this figure rises to 4.6 years. The average income of households in London that rely on support from parents is £40,900 compared with £42,400 for those who do not.
The stakeholders of the housing sector need to come up with an innovative model to help first-time home buyers acquire home at lower capital values.