The property market has always presented challenges for first-time buyers, but recent trends indicate a significant reliance on family support. According to recent data, over a third of individuals stepping onto the property ladder for the first time are doing so with help from the ‘Bank of Mum and Dad’. This trend underscores the increasing difficulties facing young people in securing their own home without financial assistance from family.
The Growing Trend
Recent statistics from a comprehensive study highlighted in The Guardian reveal that 35% of first-time homebuyers now depend on financial help from their parents. This figure has seen a steady rise over the past decade, reflecting broader economic pressures, such as rising house prices and stagnating wage growth. For many, the prospect of saving a sufficient deposit without parental aid has become daunting, if not unfeasible.
Financial Contributions
The nature of the contributions from parents varies widely, but they often include direct monetary gifts, loans or co-signing mortgages. In some cases, parents are dipping into their savings or releasing equity from their own properties to help their children. The average contribution from parents in 2023 was £24,000, which represents a significant portion of the deposit required in many parts of the UK.
Regional Variations
The reliance on family for financial support is not uniform across the UK. In areas like London, where property prices are significantly higher than the national average, nearly 50% of first-time buyers receive financial aid from their parents. In contrast, regions with more affordable housing markets see a lower percentage of such dependency, though the numbers are still substantial.
Impact on the Property Market
The substantial financial support from family is playing a critical role in sustaining the property market. Without this ‘family finance’, many first-time purchases would simply not happen, potentially leading to a slowdown in the market. This trend also raises questions about market accessibility and the widening gap between those who can count on familial assistance and those who cannot.
Future Outlook
As house prices are predicted to continue rising, the dependency on the Bank of Mum and Dad is likely to increase. This situation poses a challenge not only for prospective buyers without access to family funds but also for parents whose retirement savings are becoming entangled with their children’s property ambitions.
Alternatives to Parental Help
For first-time buyers without substantial parental help, several alternative pathways can still lead to homeownership. Shared ownership schemes offer a practical solution, allowing buyers to purchase a portion of a property while paying rent on the remainder, reducing the need for a large deposit. Another option is buying property with friends or relatives; this approach can split the financial burden and increase purchasing power, making more expensive markets accessible. In England, potential new home owners can also take advantage of the First Homes Scheme, check the Government website for eligibility criteria.
Each of these options requires careful consideration of their unique terms and potential long-term implications, but they represent valuable opportunities for entering the housing market independently. If you are a first-time buyer looking for advice on navigating the property market, or if you are a parent planning to support your child’s home purchase, Belvoir can help. Our experts offer tailored advice that can make the process of buying your first home as smooth and successful as possible. Contact us today to find out how we can assist you in making your property dreams a reality.
