First time buyers are increasingly relying on their parents' cash -- and it's making the housing market less fair

LONDON — After years of house price rises, the UK housing market has become less fair on first time buyers without wealthy or generous families. 

Around a third of first time buyers relied on family loans or gifts from the Bank of Mum and Dad in 2014, up from 20% just four years earlier, according to a report from the Social Mobility Commission.

This is projected to hit 40% by 2019, the report said.

The study also found just 31% of 25- to 29-year-olds owned a home compared with 63% in 1990.

Similarly, in 1990 39% of 20-24 year olds purchased their own homes, while only around one in ten managed to do so in 2015.

“Aspiring first time buyers for whom family help is unavailable will most likely remain disadvantaged, even more so if their parents fall into the least educationally qualified category,” the report said.

“Going forward, the gap will almost certainly be maintained between those in the UK who can acquire that most significant of financial assets, the family home, and those who cannot,” it said.

Here is the chart:

And here is the chart showing how fewer young people are owning their homes:

The trend has helped create a generation of renters.

The private rental sector has doubled in size since 2004. Just under 63% of homes were inhabited by owner-occupiers in 2016, figures from the English Housing Survey showed earlier this month, which is the lowest level since 1985.

“Homeownership amongst the youngest group of 20-24 year olds, was almost 40% in 1990 but this dropped to around 30% in 1995 and has continued to fall,” the Social Mobility Commission said. “This group experienced a particularly sharp drop in 2010, to just 13%, a decline of 9% from the previous observation year of 2005.”

The combination of a housing shortage and years of near-zero Bank of England interest rates have sent house prices soaring, and made stumping up the money for a deposit more difficult.

The private rental sector has boomed as a result, with almost half of all people in England aged 25 to 34 paying a landlord. Around 250,000 private renters entered the market in 2016, with the sector now accounting for 20% of all accommodation.

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