House of the rising son (or daughter): the impact of parental wealth on their children's home ownership
|Day:||Wed 3 Jul|
Homeownership rates have plummeted for today’s younger generation. Rising unaffordability has led many first-time buyers to rely on family or friends to help with the deposit on their first home. The so-called Bank of Mum and Dad (BOMAD) is much-discussed but there has been little analysis of the strength of the relationship between parental support and people’s chances of becoming homeowners.
Using the Harmonised British Household Panel Survey and Understanding Society we create a novel dataset connecting parents and children. This allows us to test the strength of the relationship between parental property wealth and the probability that adult children become homeowners, controlling for a range of possible confounding factors (earnings, education, etc).
Using a range of parametric and non-parametric statistical techniques we find a strong (and statistically significant) relationship between parental property wealth and children’s homeownership. Moving from the median amount of property wealth up to the 75th percentile increases the probability that someone’s children will become a homeowner in a year by over 11%. A 10% increase in parental property wealth is associated with a 1.1% increase in the gross property wealth of their children and the importance of parental property wealth has increased over time. In the 1990s and early 2000s 30-year olds with property-owning parents were approximately twice as likely to be homeowners as those without. From the mid-2000s they were almost three times as likely.