How rich do your parents have to be to help you buy a house?

In January this year house prices finally started to dip. Sadly it’s not the welcome news that people struggling to get on the housing ladder might have hoped. Year-on-year house price inflation still far outstrips wage increases and a growing number of people are now only able to buy their own home if they’re lucky enough to have a handout from their parents.

So what’s really happening in the property market?

Yahoo looked at the figures to find out.

So how much does it actually cost to buy a house these days? The average house in the UK costs £294,000, down from November’s prices but still £26,000 higher than a year earlier, according to the Office for National Statistics. In England, the average house now costs £315,000 - up by 10.3 per cent in just one year.

But my salary isn't going up that fast Indeed. Incomes are growing much more slowly, widening the gap between earnings and house prices every year. Wages grew by 6 per cent overall last year, but only 3 per cent for those working in the public sector.

So who is managing to buy? People who have help from family members to bridge the gap between earnings and prices are more likely to be able to purchase a home. Almost half of first-time buyers now have help from their parents in the form of a deposit or a cash gift.

The 'Bank of Mum and Dad', right? Yes - in England in 2020, 6.8 million homes were owned with a mortgage but 8.8 million were owned outright, according to the Office for National Statistics - and that ratio is rising. That means the number of families able to pass on large amounts to their family through cash handouts or inheritance after death is rising too.

Who's getting this cash? Research by the Institute for Fiscal Studies (IFS) predicts that parents will provide their children with £17bn in gifts and informal loans this year. Most of those cash transfers are expected to be made by the over-50s to adult children aged in their twenties and thirties.

Why are they giving these gifts? The IFS found that gifts were more likely to be made by parents when a child married or bought a home. “About half of the money young adults receive is for property purchases or home improvement, with an average of £20,000 in support coming from parents,” it concludes.

How many people are getting a handout? The percentage of adults benefiting from their parents’ generosity is rising, with 5 per cent of adults now receiving a gift and another 2 per cent getting a “significant” loan in a two-year period.

The richest get more than most Young adults with the wealthiest parents receive 26 times more in handouts than those with the lowest incomes. The average gift is just £2,000 but the largest 10 per cent of gifts are for more than £20,500.

So it's a chosen few Perhaps unsurprisingly, most of this money ends up in the hands of only a few people. The largest 5 per cent of family cash transfers made up more than half the total value of family gifts and loans between 2018 and 2020, the IFS found.

What does this mean for the house buyers? Almost a quarter of property sales in Britain are now cash purchases - including a growing number of first-time buyers. Henry Pryor, a private buying agent, told us: “The bank of mum and dad is still busy, so some fortunate first-time buyers are still able to proceed onto the housing ladder - and a small but growing number without even needing a mortgage at all.”

But also... Additionally, it means cash buyers are pushing up prices for everyone. The effect of large gifts given by wealthy parents to adult children is to make it even more difficult for those relying only on their own savings and income to get that first step on the property ladder.