"Only better-off young people and those who have parents who have already accumulated housing wealth are likely to be able to consider home-ownership"
The Commission warns that the increasing trend will have "damaging consequences" for social mobility as young people on lower incomes are finding it almost impossible to get a foot on the housing ladder.
For 25 to 29-year-olds, home ownership has fallen by more than half in the last 25 years from 63% in 1990 to 31% today.
Increasingly, young people are relying on the bank of ‘mum and dad’ to get a foot on the housing ladder. Over a third of first-time buyers in England (34%) now turn to family for a financial gift or loan to help them buy their home compared to 1 in 5 (20%) 7 years ago. A further 1 in 10 rely on inherited wealth.
It is not only first-time buyers who benefit from parental support - over 1 in 10 (12%) of existing owners are also benefitting from a gift or a loan when buying a new home.
With housing tenure remaining one of the main ways in which wealth is held and transferred through generations, the report warns that difficulties in buying homes are becoming a barrier to improving social mobility in the UK.
Researchers project that the number of future first-time buyers will rise slightly in the short term, then fall gradually over the next 25 years.
If economic activity weakens, the proportion of first-time buyers relying on their parents is set to stay at the current level of 34% until 2024 to 2025 and then rise to nearly 40% by 2029. If economic activity increases, the numbers of those relying on ‘bank of mum and dad’ is projected to reach a peak of 39% at an earlier stage, by 2021 to 2022, and then fall back.
The Rt Hon Alan Milburn, chair of the Social Mobility Commission, said: "Home ownership helps unlock high levels of social mobility but it is in free-fall among young families. Owning a home is becoming a distant dream for millions of young people on low incomes who do not have the luxury of relying on the bank of mum and dad to give them a foot up on the housing ladder.
"The way the housing market is operating is exacerbating inequality and impeding social mobility. It is welcome that the government recognises the growing problem people face in getting on the housing ladder. A major national effort is needed to expand opportunities for home ownership and will require more radical action on housing supply."
The report’s lead author, Dr Paul Sanderson, from Anglia Ruskin University, added: "Going forward, the gap is likely to continue between those in the UK who can acquire that most significant of financial assets, the family home, and those who cannot. Only better-off young people and those who have parents who have already accumulated housing wealth are likely to be able to consider home-ownership without radical changes to the housing market."
