A recent report by Legal & General and the Centre for Economics & Business Research shows that the ‘Bank of Mum and Dad’ will help 300,000 of their children to buy a home in 2016. This works out at an average of £17,500 per child and makes the ‘Bank of Mum and Dad’ amongst the top 10 UK mortgage lenders!
House prices have risen 43-fold since 1971, stopping many young people from being able to get a foot on the property ladder without additional support (from family). General consensus is, however, that the ‘Bank of Mum and Dad’ is at tipping point and cannot sustain this level of lending indefinitely.
If food prices had risen in line with house prices:
- 4-pint carton of milk would cost £10.45
- a chicken would cost £51.18
- a box of 6 eggs would cost £5.01
- a loaf of sliced white bread would cost £4.36
- a leg of lamb would cost £53.18
Concerns are that parents are choosing to help their offspring onto the property ladder over things like pension contributions and could be giving away more than they can really afford.
Nigel Wilson, chief executive of Legal & General, said: "The generosity being displayed by UK families doesn't make up for intergenerational unfairness - younger people today don't have the advantages the baby-boomers had, including cheap housing that delivered windfall gains".
The ‘Bank of Mum and Dad’ is not a sustainable solution to the housing problems faced by young people today. We simply need to build more houses. Recent government policies seem to be trying to address this issue by promising some 220,000 new starter homes to be available within the next five years.
By addressing the housing issue of supply, house prices can once again be brought in line with wages making them more affordable for everyone, but especially young people looking to invest in their first home.