Housing market ‘impeding social mobility’
The proportion of first-time buyers relying on inherited wealth or loans from the ‘bank of mum and dad’ has rocketed to an all-time high and the trend looks set to continue, according to research by the Social Mobility Commission.
It found that 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 20% seven years ago. A further one in 10 rely on inherited wealth.
It is not only first-time buyers who benefit from parental support – over 1 in 10 (12%) of existing owners are also benefitting from a gift or a loan when buying a new home.
What about everyone else?
With housing tenure remaining one of the main ways in which wealth is held and transferred through generations, the report warns that difficulties in buying homes are becoming a barrier to improving social mobility in the UK.
Analysis of government and housing market data by researchers from the University of Cambridge and Anglia Ruskin University has found that the proportion of young people 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% in 1990 to 31% most recently. Many of those who do manage to buy eventually can only do so at an older age.
The Rt Hon Alan Milburn, chair of the Social Mobility Commission, said: “Home ownership helps unlock high levels of social mobility but it is in free-fall among young families. Owning a home is becoming a distant dream for millions of young people on low incomes who do not have the luxury of relying on the bank of mum and dad to give them a foot up on the housing ladder.
“The way the housing market is operating is exacerbating inequality and impeding social mobility. It is welcome that the government recognises the growing problem people face in getting on the housing ladder. A major national effort is needed to expand opportunities for home ownership and will require more radical action on housing supply.”