Property markets are known for being tumultuous. The UK market is no different. As Brexit uncertainty combines with ever-changing demands and conditions, it is easy to see why the property market is unstable.
The UK’s current market often inhibits people from joining the property ladder as opposed to helping them find their feet. Home ownership rates have been consistently low for years. Large groups across all age categories are finding themselves unable to buy. While mortgage lenders can play a big part in helping people to secure their own homes, for many people who are struggling to find their feet, help comes from a lot closer to home.
A younger generation’s property struggle
Only 35% of people aged 25-34 own their own homes, down 55% on two decades earlier. And 40% of young adults cannot afford the cheapest homes in their local area. The property market is currently a bleak landscape for the younger generations.
As house prices climb, they find themselves priced out of the market and unable to take the first steps onto the property ladder. House prices have increased disproportionately to income rates. In a lot of cases, a young person's salary will not be enough to keep up with soaring house prices.
While a significant amount of young people choose to live with parents for longer, some are left with private rentals as their only choice. In these instances, soaring rental prices make it even harder for them to save up for a deposit. Because of this, home ownership becomes even more difficult and far-fetched. With more of their income going to rental payments, they are left in a vicious cycle where home ownership only gets further away.
Bridging the gap
Aside from allowing their children to live at home for longer, there is an increasing trend for parents to help with the money. Often they will pick up the financial responsibility of home ownership. It is predicted that this year parents will provide
over £6.3 billion in loans to help secure their children a first property. One in five property transactions will come, at least in part, from the bank of mum and dad.
With young people stuck in a financial bind, unable in some instances to even save for a deposit, it is up to parents and familial support to bridge the gap. As well as direct lending, it is not uncommon for younger people to find themselves stuck outside the property market until they happen upon some form of inheritance. Less often are they able to save the necessary funds exclusively by themselves.
Because of these trends, the bank of mum and dad is equivalent to the UK’s
eleventh biggest mortgage lender.
A wider issue
While younger generations are often the hardest hit, this is not purely an issue for young people. It is also estimated that
22% of people aged 45-54 received financial assistance from friends or family members. And 7% of over 55s have also needed outside support to buy a home. The current market can be difficult for anyone to navigate.
Familial financial support is an influential component of our current property market. Going massively under the radar, it is offering a way forward for those who were before struggling to own their own homes. It helps them to defy the current economic situation and get on the property market.
While statistics are highest in the younger age demographics, the issue also spans across older categories as well. For anyone who is struggling to get their footing in the unstable, and often unfair, property market, financial support from family is giving a much-needed push. As the UK market suffers from ongoing general and political uncertainty, the generosity of family members is partly responsible for maintaining the market’s momentum.
