First-time buyers underestimating the availability of intergenerational support: BSA

The majority of people (53%) think older family members should offer financial assistance to help their children or grandchildren buy their first home if they can, but many first-time buyers not factoring in the family financial help available to them, according to research from the Building Societies Association.

Related topics:  Mortgages
Rozi Jones
14th December 2021
family generations relatives inheritance
"Perhaps families should use the festive period to talk candidly to each other about their future plans and aspirations and how best to use their inter-generational wealth."

The research shows that the biggest barrier to homeownership is getting enough money together for the deposit. 58% of would-be first-time buyers do not expect any financial assistance from their older relatives, but 71% of parents expect to provide some financial help to the younger generation.

49% of parents said they expect to leave a bequest when they die to the younger family members, but less than one in three first-time buyers (29%) are expecting it. There’s also a mis-match in expectations on giving and receiving a monetary gift towards buying a home, with 41% of parents expecting to do this, but only 24% of first-time buyers expecting it.

The findings also show that parents under the age of 60 are less inclined to provide financial support to younger members of their family compared to parents aged over 60. This is likely to be due to the higher value of assets held by older generations.

Whilst the high level of support on offer from older members of the family will be welcome news for first-time buyers, it cannot necessarily be relied on. The older generation have more cash savings, investments and property equity than the younger generations, but much of this is likely to be left as inheritance. It may also be the case that some of their wealth will be spent on social care, reducing the value of the legacy they eventually pass on.

68% of first-time buyers therefore say they will be using their own accumulated savings to fund their deposit.

The research also found that almost half of people (45%) expect house prices to continue to rise, with just 13% expecting a fall. This may be one of the reasons for a drop in confidence in the housing market, with just 21% thinking now is a good time to buy, down from 26% three months ago.

Paul Broadhead, head of mortgage and housing policy at the BSA, said: “With house prices rising considerably more than inflation and wage growth, it’s not surprising that first-time buyers find raising a deposit the most difficult aspect of getting on the property ladder and something it is hard to keep pace with. But it’s clear that many families are more willing to share their wealth and give financial help than the younger generation appreciate.

“Perhaps families should use the festive period to talk candidly to each other about their future plans and aspirations and how best to use their inter-generational wealth. It could be the best present under the tree for all!”

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