Thursday, 23 September 2021
Around 55 per cent of people aged between 25 and 29 said they could not afford to get on to the property ladder without support from the 'Bank of Mum and Dad'�, according to research by Lloyds Bank.
Across all age groups, 31 per cent of people thought home ownership would be beyond their reach without a financial handout.
The bank estimates that British parents collectively transferred £8.3bn to their adult children in 2014 to help them buy a home of their own.
Helping a child to get on to the property ladder was the single most common reason parents gave money to their offspring during last year.
A further £5.1bn was handed over as cash gifts or payments and Â£2.6bn went to help children buy a car.
It was not just parents who were handing over large sums of money to help their children get on to the property ladder, with grandparents also collectively handing out £1.9bn for this purpose in 2014.
House prices soared last year in London and the South East, as is evident in Henley and its surrounding areas.
However, according to financial experts, wage growth has been fairly stagnant during the past two years, with incomes failing to keep pace with inflation, and rising at a significantly slower pace than house prices.
As a result, affordability has become stretched, with the average home now costing more than five times average earnings, compared with less than 4.5 times average earnings at the beginning of 2013.
Meanwhile, borrowers have had to put down bigger deposits to meet lenders' tougher criteria in the wake of the credit crisis, although the situation has improved somewhat following the launch of the Government's Help to Buy scheme.
Katie Baldwin, an associate director at Savills in Henley, adds: â??It is a worrying statistic that the average age of a first time buyer is now over 30 and, as property values continue to rise, for some it must seem that home ownership is growing increasingly out of reach.
â??Whilst recent Government initiatives, such as Help to Buy, have certainly helped get some on to the ladder, restrictions in pay rises has meant saving for a good deposit has become even more difficult and, in conjunction with the tightening of lending criteria, means many would-be buyers are frozen out of the market.â?�
Philip Robinson, savings director for Lloyds Bank, said: â??With more people taking on further education, and higher associated costs, rising house prices and a challenging job market for young adults, there is no Â sign of a slowdown in parent support for adult children.â?�
How did it come to this?
In Britain, property ownership is a bit of an ongoing saga. Some would say that Lady Luck has smiled on the older generation, which has lived through repeated property booms, each of which has spun gold. House prices in the Thatcher years went up by 187.9 per cent, then by 6.5 per cent in the Major years and by 211.3 per cent under Blair. They dropped by 7.2 per cent in the Brown years and have so far risen by 11.9 per cent under Cameron.
As a result, the over-65s now own a trillion pounds of equity, yet their grown-up children face a housing market as inhospitable as Siberia in January. Is there anything they can do to help? The answer is yes.
â??This divide between the generations is being offset by downsizing,â?� says Lucian Cook, head of research at Savills. â??Existing housing wealth will be recycled through the generations. The Bank of Mum and Dad is going to become much more important over the next decade.â?�
The Prudential Downsizing Index says that 41 per cent of home owners over 55 are planning to sell soon, and as 65 per cent of first-time buyers now have help from their parents, it is easy to see where some of the money will go.
But for those who will never get on to the ladder, what then?
Experts say the number of renters in the country is expected to rise by 1.2?million in the next five years, when they will constitute nearly a quarter of all households.
24 February 2015
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