When my sister had a little girl, my aunt told her: ‘You’re vulnerable for the rest of your life.’ She meant, of course, that my sister’s overwhelming love for her daughter would mean a lifetime of worry – as well as all the incredible new experiences that motherhood would bring.
She should have added financial vulnerability to that list. From pocket money to tooth fairy cash, childcare and education, children are expensive. According to the Centre for Economics and Business Research, the cost of raising a child to the age of 21 is £230,000, or more than the price of an average semi-detached house in Britain.
Many parents will know that the financial outlay doesn’t stop at 21. With a ‘broken’ housing market and recent research from the Office for National Statistics showing that a typical home now costs more than seven times income, getting on the housing ladder has never been more difficult. In fact, the affordability gap is now so pronounced that, in some areas, house prices versus income multiples have become obscene. For example, in Kensington and Chelsea house prices are 38.5 times the median gross annual earnings.
And so today comes a report from the Social Mobility Commission which says that the number of first-time buyers relying on the ‘bank of mum and dad’ for financial help has hit a record high. The commission’s analysis suggests that more than a third of homebuyers in England depend on money from their family.
The Social Mobility Commission found that this group of first-time buyers has soared from 20 per cent in 2010 to a historic high of 34 per cent. The report also found just one in three 25 to 29-year-olds owned a home compared with 63 per cent of the same age group in 1990.
As a 20-something back in the late 1990s, I found it insanely difficult to buy my first flat (although living in London meant the stakes were high). I can only imagine what it must be like today. According to Land Registry, the average cost of a home bought by a first-time buyer in England and Wales is now just under £200,000. No wonder so many are turning to their parents for assistance.
Notwithstanding the struggle by individuals to become property owners, this new study raises worrying questions about inequality and social mobility. What if mum and dad are unable to help out? What then? A lifetime of renting and lining the pockets of multiple landlords?
The former Labour MP Alan Milburn, the chair of the commission, had this to say. ‘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.’
He added: ‘A major national effort is needed to expand opportunities for home ownership and will require more radical action on housing supply.’
Given the government’s lack of success in this area, I’m not holding my breath.
Helen Nugent is Online Money Editor of The Spectator
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