Bank of mum and dad propping up the property market in UK
The property market in London and the South East of England is being assisted by the so-called bank of mum and dad and inheritances, according to new research.
The amount of money lent or given by parents to their offspring to allow them to buy a home is worth an estimated £103 billion, the research from real estate firm JLL and YouGov shows.
In addition, it is estimated that money from the bank of mum and dad and inheritance could assist in the purchase of more than £1 trillion worth of homes in the UK as a whole.
It is estimated that between a quarter and half of all home purchases in London and South East England could be assisted in this way with the average pot coming in at £55,300.
The average hand out per child in London and South East England is £24,800 and while 70% of parents say all monies passed down will be a pure gift, 26% of parents will use their own inheritance to them to help their children onto the housing ladder.
‘We all know that the bank of mum and dad has helped many beneficiaries on to the housing ladder but the numbers revealed in this research are astounding,’ said Neil Chegwidden, director of residential research at JLL.
‘The bank of mum and dad in London and South East England alone amounts to more than £100 billion. If this money is used as a 10% deposit it could help fund more than £1 trillion of home purchases,’ he added.
He also pointed out that the impact for the London and South Eastern England housing markets is huge, providing a ‘crutch’ for house prices in these regions, but Chegwidden believes it is more likely to lead to further upward pressure on prices.
‘With the bank of mum and dad support likely to push house prices even higher when affordability is already stretched it means that it will become even more important for the privileged parts of society, but inevitably leaving other households further behind,’ he concluded.
The majority of those surveyed said they believe the affordability gap will widen over the next 20 years.