To think that parents "helping out" their kids to buy property, just keeps house prices high?

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So, a LOT of parents help their kids buy houses these days, as property is expensive.

But surely it's only expensive because people keep buying it at that price?

If these young adults can't afford a £30k deposit, they couldn't buy the houses, and prices might fall because of it?

Or not.

But still, it must be compounding the issue?

And also, maybe, people's expectations are 'too high'? Why would (say) a single 24yo need a 2 bed semi, when maybe a cheaper 1 bed flat would do? Maybe that's a different discussion though?

That's not been my experience, dp and I each bought without parental help, neither set of parents would have been in a position to help.

A lot of friends my age (30) have bought and almost all received no help at all, or a token gesture of say £500 toward solicitor fees.

Are you down south op? I sometimes wonder if it's more prevalent than here up north!
Most started in flats or 'fixer upper' houses

I think it’s more the case of rising house prices have made it difficult to buy a property without help from DP’s, if you’re lucky enough. Average age of buying first house is 32, so at this point in life you would be looking for a 2 bed house rather than a one bed flat as you would likely be with a partner and have young children, so probably already renting somewhere bigger than a one bed flat. Add to that paying rent is generally more expensive than a monthly mortgage. The problem is not people helping out their DC’s, it’s that house prices have risen so high and so out of proportion compared to wages and no one has addressed it. It’s created a generational wealth divide and the consequences will be very damaging in the future.

Every single one of my friends had help from parents to buy.

I’m unsure if I will ever manage to do so, with no help at all. Sadly I don’t have parents to help but if I do manage it it will feel much more of an achievement I guess! Would love for house prices to fall though

That's a totally unfair comment!!!

It's not the young people who need help from their parents that are driving the house prices up! It's the investors who have several properties most of them unoccupied!!!

Besides the idea of a young person buying a house with an extra bedroom shouldn't come at such a shock to anyone. How about if he/she is seriously considering marriage+children?!! Oh! I see! Young people nowadays can't even consider those possibilities until their mid/late thirties.... Besides, their parents' house has stupidly risen in value over the last decades so why not help their kids? Even if it's just a loan?

I agree it’s definitely compounding the issue.
I didn’t have any help from my parents but all my friends did, bar one

Live in London and not one person i know as bought without at least some parental support. prices are just too high. Average flat is nearly half a million with a 4 bed semi usually coming in well above a million. Most don't put down a 10% deposit though most have put down a 20-30% deposit. It's more that 5 times an single person's salary even at £50k will only get you £250k which means you need a min of £150k deposit to by a flat. Plus stamp duty (in the past anyway), fees, furnishings etc

This thread is making me feel proud that DH and I bought our first home this year without any help from out parents. I can't think of any friends that could say the same.

But a 30k deposit will barely get you anything in London. And everyone, and I mean everyone, that I know bought having received a significant gift from parents in London.

I think the issue is high rent prices so parents want to help people out of the “trap” where people who earn enough for a mortgage can’t save a significant deposit whilst renting. The rent on our modest one bed was £1430/month. Most people I know who have bought have had lower mortgage repayments than their rent was, so I guess some parents want to help them get there sooner (especially if they are intending leaving it as an inheritance in the future). We didn’t have help so it took a bit longer but I can understand why people would want to.

The only thing which will reduce house prices long term is large scale building.

Buying and selling is expensive and disruptive so I can understand why people would choose to buy somewhere larger than their current needs in anticipation of needing that extra bedroom one day. And you can’t blame parents for wanting to help their adult DC out of paying a higher rent than they would a mortgage.

I think parental help has always been there. My grandfather gave my aunt £13,000 as a deposit. My uncle was given £100,000. My father never bought a home.

My cousin will be getting a £150,000 deposit from his mother.

I am saving up- but whilst I don't expect to be given help I wouldn't turn down any offers either.

I agree. That and the fact that you can borrow more now. When we bought years ago we got 2.5 x joint salary, (would have been 3x single salary), now you can borrow 5x either joint or single income. More money available = higher prices.

It is true and its massively divisive, entrenching the gulf between those who have capital behind them and those who don't. Yes of course there are people who manage to save for a deposit on their own but its undeniable that Bank of Mum and Dad skews the housing market, particularly in London.

The thing is though you can't really blame people. If I had that kind of cash lying around and my dd was of an age I'd probably help her out.

The solution would be for there to be more affordable housing in the first place and reduce the absurd fetishisation we have of property (which I notice is still fairly healthy considering the pandemic and all that).

We are in the north and we had help from DPs parents. They gifted us £30k towards the house. We would have still bought a similar priced house but it would have taken us another couple of years to save. It has meant we can get married sooner and have children sooner so we are really grateful to them. I don’t think the issues surrounding house prices are the same in the north vs south though (at least not where I am).

I think rather than giving DS the money for a deposit or letting him live at home into adulthood, I'd rather buy a flat and let him live there for cheap rent. That would mean he's able to save for a deposit for his own first home, but would also encourage him to learn to live independently, budget etc.

Hopefully that will change now people have to save the vast majority of the deposit themselves.

I think it very much depends on area. I live in a solidly working class area in Scotland. Housing isn't that expensive and most people's parents aren't in a position to give them much more than say 1-2k.

The thing is that millenials/gen z are now the first generations in a long time to have things worse than their parents. No more jobs for life with great pensions, housing is much more expensive, most employers now looking for a degree and further/higher education leaving people tens of thousands in debt.

As a lone parent, even with fairly cheap housing, I really struggled to get the money together for a deposit on my first house, which I've just bought at 39. If I can help my daughter at all when the time comes for her to get her own I will. eveeryone wants a better life for their child than they had.

@DuesToTheDirt

I agree. That and the fact that you can borrow more now. When we bought years ago we got 2.5 x joint salary, (would have been 3x single salary), now you can borrow 5x either joint or single income. More money available = higher prices.

Higher levels of lending and LTV reflects that prices are high rather than causes it. There are very few places in the UK where 3 x salary would enable anyone without a) a very high salary and / or b) a very large deposit to buy in the first place. Banks want to lend, it’s how they make money, so they enable the maximum number of people to do so.

I think that if you’d said this 20 years ago just after prices had quadrupled I would have agreed completely. Now it seems a little out of date. The population has increased and we have second home owners and landlords that own hundreds of properties. High house prices are normal, and a “crash” of a few thousand means nothing. It’ll take a bit more to get this mess back under control than stopping parents from helping their kids with a couple of thousand for a deposit for an owner-occupied home. Go after the big fry who are causing this, for once.

@IlanaWexler I suspect some parents would also like to do that but unless they are cash purchasers the restrictions on buy to let mortgages usually dictate that they cannot let to family, which I guess drives them to cash gifts

YABU

Supply and demand (ie too much demand, not enough supply) is keeping the prices up, not where the deposits come from.

We were ready to buy out of London (MILES out of London) but it fell through and our parents gave us a sum so we could buy in London. We will save to do the same for our children.

Better to give it to them when they need it than when we die and half of it is lost to inheritance tax......

So, a LOT of parents help their kids buy houses these days, as property is expensive

A lot? Really? I find this odd. At what age? Because not MANY people are mortgage free at 50 or even 50 nowadays, so are you saying that parents are opting to give their kids large deposits in preference to paying their own mortgage?

YANBU

Property is only worth what someone is willing to pay and so if parents and the government did not 'help to buy', prices would inevitably drop in places where property prices are far in excess of 4 x average earnings for that area.

But prices go down as well as up. Where I live, it took 10 years for prices to get back to 2007 levels after the 2008 financial crash. A similar thing happened in 1989/1990 after the crash then. I'm pretty sure the C-19 / Brexit impact will lead to another similar crash. But the thing with crashes is that although they are inevitable, predicting exactly when they'll happen is very difficult. If you're saving for a deposit, keep up the good habit and you should be able to buy cheaper property in the future.

I always wonder if all those young people who struggle to buy a home are willing to later on sell it for the same price? Because IMO it's the wanting to make a profit that drives the prices up. If everyone would sell it what they bought it for it wouldn't be a problem, but people complain that they want to buy a cheap house but 5 years later thry want to sell it for much and much more money. So the cheap house doesn't exist anymore for the next generation.

The thing is that millenials/gen z are now the first generations in a long time to have things worse than their parents.
At risk of sounding petty, don’t forget those of us in Gen X who never had family support and who’ve had to live our entire lives trying to run up the disappearing staircase. This is not new, nor any more.