House prices go up... birth rates go down

YOUNG couples are putting off starting a family as a result of rising house prices, research shows.

They want a home of their own before they have a baby but face a longer wait before they can afford to buy.

A European Bank for Reconstruction and Development study found that for every 10 per cent increase in house prices, the overall birth rate falls by 1.3 per cent.

As around 700,000 babies are born in Britain each year, an increase in house prices on that scale could reduce the birth rate by more than 7,000, the figures suggest. The pattern is the opposite when looking only at those who own their home, with a 10 per cent house price rise causing a rise in the number of births among this group by 2.8 per cent.

Among renters, however, the same increase causes a birth rate decline of 4.9 per cent, bringing the overall national birth rate down.

Dr Cevat Giray Aksoy, who carried out the research in England, said renters are likely to postpone having children until they are on the property ladder.

By contrast, rising house prices usually mean that those who already own a home have a larger proportion of equity in their home. This may make them feel wealthier and more inclined to have more children, he said.

‘These findings support the notion that housing costs exert downward pressure on the fertility outcome of young adults and that there is a connection between getting on the property ladder and building a family,’ he said at the Royal Economic Society’s annual conference in Bristol.

Experts have previously warned that some couples who put off having a child until their finances are fully in place may find they have left it too late.

The EBRD study suggests that those aged 20 to 29 are disproportionately affected by soaring property prices.

This could explain why the average age at which mothers have their first child has now risen to 30.

The researchers call for the Government to scrap the maximum purchase cap of £250,000 – £450,000 in London – on its Help-to-Buy ISA as the amount may be too low to allow couples to buy a home big enough for a young family.