Britain’s housing market ‘exacerbating inequality’

Group warns home ownership ‘becoming a distant dream’ for young

The historically high proportion of firsttime buyers relying on the “bank of Mum and Dad” is making inequality worse as home ownership becomes a “distant dream” for millions of young people, an advisory group has warned.

It said the trend will have damaging consequences for social mobility as young people on lower incomes are finding it almost impossible to get on the housing ladder, one of the main ways wealth is held and transferred through generations.

Government advisory body the Social Mobility Commission found that more than a third (34%) of first-time buyers now turn to their family for a financial gift or loan to help them buy a home, compared with one in five (20%) seven years ago. A further one in 10 rely on inherited wealth, the analysis of government and housing market data by Cambridge University and Anglia Ruskin University researchers found.

Home ownership has fallen among 25 to 29-year-olds by more than half in the last 25 years – from 63% in 1990 to 31% most recently, the report said.

Former Labour cabinet minister Alan Milburn, who chairs the commission, said: “Home ownership helps unlock high levels of social mobility but it is in freefall 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.”

The researchers found that around a third (30%) of UK households with dependent children currently have assets which could be used towards a deposit for a home, but the figure drops to 10% for households with no formal educational qualifications over two successive generations.

They predicted that the number of future first-time buyers will rise slightly in the short term and then fall gradually over the next 25 years, with the speed and extent of both to be dictated by the performance of the economy.

If the economy weakens, the proportion of first-time buyers relying on their parents will stay at the current level until 2025 and then rise to nearly 40% by 2029.

If the economy improves, the proportion of those relying on their parents will peak at 39% in 2021-22.

The commission has previously called on the Government to commit to a target of building three million homes over the next decade, a million of which should be commissioned by the public sector.

Ministers should also sell off more public land for new homes and allow targeting building on the green belt, while gearing starter homes towards households with average incomes with bigger discounts, among other measures.