Bank of Mum and Dad is vital to half of young homebuyers
More than half of people in their 20s would not be able to buy a home without financial help from their parents, research showed today.
Around 55 per cent of people aged between 25 and 29 said they could not afford to get on to the property ladder without support from the Bank of Mum and Dad, according to Lloyds Bank.
Across all age groups 31 per cent of people thought homeownership would be beyond their reach without a financial hand out.
The group estimates that British parents collectively transferred £8.3bn to their adult children in 2014 to help them buy a home of their own.
On average, adult children received £13,281 from their parents to put towards a deposit and the other costs associated with buying a property.
Helping a child to get on to the property ladder was the single most common reason parents gave money to their offspring during the year.
A further £5.1bn was handed over as cash gifts or payments and £2.6bn went to help children buy a car.
It was not just parents who were handing over large sums of money to help their children get on to the property ladder, with grandparents also collectively handing out £1.9bn for this purpose last year.
House prices soared by around 8 per cent last year, with a similar level of growth seen in 2013.
Recent strong gains have left the average UK property costing £267,650, according to Zoopla.
But wage growth has been fairly stagnant during the past two years, with incomes failing to keep pace with inflation, and rising at a significantly slower pace than house prices.
As a result, affordability has become stretched, with the average home now costing more than five times average earnings, compared with less than 4.5 times average earnings at the beginning of 2013.
Meanwhile, borrowers have had to put down bigger deposits to meet lenders’ tougher criteria in the wake of the credit crisis, although the situation has improved somewhat following the launch of the Government’s Help to Buy scheme.
Philip Robinson, savings director for Lloyds Bank, said: “With more people taking on further education, and higher associated costs, rising house prices and a challenging job market for young adults, there is no sign of a slowdown in parent support for adult children.”
article take from www.zoopla.com