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

[00100001]

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?

I won't give my kids money toward a deposit. They can live home and pay no rent or bills, but they can save their own money.

Why should parents help? Two young people working ft should be able to save to buy a flat. The only exception would indeed be London.

It's an interesting question OP, but i believe while houses at such sky high prices people will have to sell their own house high to get enough to be able to afford another and that is one merry-go-round which is a massive factor.

Also the 2nd home/buy to let brigade seem to have the money to just sweep in and buy at whatever price is on. Then make their money back by charging huge rents which are actually subsidised by the government! (housing benefit). Where's their incentive to not buy?

I can't imagine the parental help aspect is more than just a small percentage of the issue.

The thing is that millenials/gen z are now the first generations in a long time to have things worse than their parents
Worse in which way? When I got my first ft job after Uni, I was just happy to be able to rent a place. My furniture was throw aways, my TV about 10yo, my car even older, and holidays abroad was what I aspired to.

I am quite amazed as the things young people seem to be able to afford nowadays.

We had some help from parents to buy and also dh and I both had small inheritances (both lost a parent as children). I really don't think it's the size of deposits that is keeping property prices high, I think it's the limited supply. I grew up not in the UK and in my home country, it's also very normal for parents (here we're talking middle class, property owning parents who are materially comfortable in late adulthood) to help children to buy their first home. Except there property prices are definitely not high. In fact, it's very normal for houses to sell for less than they were originally purchased for. My own childhood home recently sold for about 60K. It's a detached house, 3 storeys, nice garden. My grandparents bought it in the 19070s for about 30K! It's because of over-supply of cheap houses and the generally crap economy.

In fact, if the powers that be try to stop my generation from helping their kids to buy after the amount they’ve already made us work to support the baby boomers and rich landlords ( whom of course such laws won’t affect, the rich make their own), those “grace future consequences” of the already-existing wealth divide might just appear overnight.

Grave!

Previously it was easier to trade up - from a 1 bed home to a 2 bed to a 3 bed. Nowadays this is more unusual as incomes do not tend to rise as couples typically buy when both working full time then start a family and then one of them goes part time. And expenses progressively go up with a family and childcare.

So it's very hard to "climb the ladder" and you pretty much need to buy a family house right from the start if you're ever going to have one.

Previously there was an escalator rather than a ladder whereby various factors came together (High inflation, house purchase based on one income etc) such that it was very easy to upgrade to a bigger house once you had your first property. It's no longer easy unless you move to a cheaper area, which isn't always possible.

Parental help to buy definitely contributes to keeping house prices high, but it's very much not the only factor, buy to lets, empty homes, holiday homes, lack of housing stock relative to rising demand, smaller household size,
Foreign investment properties, lack of social housing, all these and more are factors.

When I bought in the 1990s it was common to get a 100% mortgage that would be less than your rent and lots of mortgages even gave you cash back. So it was pretty easy for a lot of people to buy without help or even without a deposit. Often people took out £2k on a credit card for their deposit.

So the lack of availability of 100% mortgages is a bigger factor I would say.

It's somewhat complex. Pre-Covid, there is aggregate supply and demand with smaller and fragmented households increasing demand beyond supply. Land banking and pipeline management by developers constrains supply more than planning hence government planning changes probably won't achieve much. With this imbalance, changes like help to buy and stamp duty holidays will just enrich the sellers.

The difficulty in increasing supply to help first time buyers is that even if supply increases, demand for second homes and buy to let may mitigate and reductions in prices.

that said, in the medium term, it seems difficult to see the effects of COVID being supportive to house prices.

I'd much rather see parents helping their kids get a foot on the property ladder than more homes being snapped up by greedy landlords tbh.

Not sure why some posters see a big difference between allowing adult children to live at home and giving cash

Well I think the one reason that people don't always start with the 1 bed flat is because ftbs are older now & moving often is expensive.

I don't know anyone who didn't have help, isn't the bank of mum & dad 8th on the list of "lenders" & plenty have help to move up the ladder too. It's a tough one because naturally you want to help your dc but then some people have no help & in London your chance of getting on the ladder is probably more to do with whether your parents can help regardless of your job.

Dh and I bought in London without parental support in mid twenties/early 30s, only a flat though!
Interestingly my grandad had help from his parents in the 50s as they were living in a caravan with their DCS whilst saving to buy

BIL and Sil bought with no "help" although sil had a small inheritance

Never had any help from parents we did it ourselves. A 2 bedroom peoperty is easier to sell and make money on that a 1 bedroom flat (we’ve owned a 1 bedroom flat, 2 bedroom flat and now a 3 bedroom house). People can live in whatever’s size propety they want, we have no kids but have three rooms so we have our bedroom, an office/study and a spare bedroom. My friend and her husband had a 4 bedroom house and it was simply because they could.

Personally I think there should be much bigger levies on foreign owned property & 2nd home ownership because it's out of kilter.

So it's very hard to "climb the ladder"

I agree the bottom rung is so high now & people who got on in the last few yrs won't see anything like the historic growth.

When I bought in the 1990s it was common to get a 100% mortgage that would be less than your rent and lots of mortgages even gave you cash back. So it was pretty easy for a lot of people to buy without help or even without a deposit. Often people took out £2k on a credit card for their deposit.

One of my older colleagues did this. She bought a flat on a 95% interest only mortgage with a deposit she took from a credit card. She made about 500k when she later sold it & rented it out for yrs.

My parents didn't help me, council house, skint growing up. Now I own and have a lot equity in the house. Absolutely be helping dc out with deposits. I do wonder if I've ruined my children with their naice middle class upbringing. They have high expectations and because they've never really known hardship/ hunger in a way that I was familiar with growing up they just don't understand what a struggle it is for many people. I hope they do well in life as I think it must be pretty tough to downgrade your life expectations from what we have to what I had growing up.

DH and I are mid twenties, average earners and bought our house in the SE without any help, whilst renting at the same time. Just look a lot of ruthless saving and I will absolutely expect to sell it for a profit when it comes to it.

@dontdisturbmenow@ Depending how long you plan on letting your offspring live rent and bill free at your home, you may well be subsiding them to similar amounts that others receive up-front in cash.

If people stop buying they will need to rent, so landlords will buy more rental properties, no?

And one bed starter homes aren't great deal any more because stamp duty is now so high (ok there is a SD holiday at the moment but it won't last long). So every time you upgrade by moving to a slightly bigger home you can blow 10-20k on stamp duty easily. It might be better to stretch yourself in the first place and not keep moving.

Why would (say) a single 24yo need a 2 bed semi, when maybe a cheaper 1 bed flat would do?

Because stamp duty, solicitors fees, estate agent fees and moving costs are expensive, and I didn’t want to have to pay it all again in 5 years time.

Because I planned for my future, and my future didn’t include people living both sides, on top of and below me. Because hard work and sensible choices buys choices and opportunity.

It's a factor no doubt but surely buy to let landlords going for similar properties is another. I remember my sibling trying to buy her first home and she kept getting outbid by landlords

Also because it makes financial sense to put as much money as possible into things that go up in value, and as little money as possible into things that go down in value, hence the expression “always buy the most expensive house you can afford and the cheapest car you can stand to drive”.

Oh definitely stamp duty, we were lucky to be able to buy a 4 bed as our first property because why pay stamp duty again when you don't need to.

@Orangecake123

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.

These gifts will have tax implications surely?