Soaring house prices reduce number of babies born in England

Sarah Knapton
Every 10 per cent increases in house prices, the birth rate falls by 1.3 per cent - PA

Soaring house prices are reducing the number of babies born in England because fewer people can afford their own home and so delay starting a family, a new study suggests.

The London School of Economics (LSE) found that for every 10 per cent increases in house prices, the birth rate falls by 1.3 per cent.

The trend is reversed for people who own their own home, with a 10 per cent house price rise sparking a rise in the number of births by 2.8 per cent. However among renters, the same increase causes a birth rate decline of 4.9 per cent.

There are around 700,000 babies born in Britain each year, so the figures suggest that soaring house prices could reduce potentially reduce the number by more than 7,000.

“This may be because the increased wealth of homeowners allows them to start a family, while private renters postpone having kids until they are on the property ladder,” said researcher Dr Cevat Giray Aksoy, who presented the findings at The Royal Economic Society’s annual conference in Bristol.

“Couples put off having children because they aren’t able to afford suitable accommodation.

“These findings support the notion that housing costs exert downward pressure on the fertility outcome of young adults and that there is a connection between getting on the property ladder and building a family.”

Inner vs Outer London house prices

According to the Land Registry data, average house prices in England have increased by nearly 290 per cent between 1995 and 2016 – from £67,000 to £232,000 – with some counties experiencing a more than 900 per cent rise in house prices.  

The study suggest that young people between 20 and 29 are disproportionately affected by property prices, which could explain why the average age at which mothers have their first child has been gradually creeping up, and is now at 30 years old.  Homeowners aged 30 to 44 tend to benefit from the growing wealth in their properties.

They researchers call for the government’s Help-to-Buy ISA’s maximum purchase cap of £250,000, and £450,000 for London, to be scrapped because it limits the size of a home, meaning couples often cannot afford more than one bedroom.

They say that schemes should aim to assist young people start a family, as well as just helping the, own a house.

“If such government schemes help people not only to get a foot on the housing ladder but also afford a family house rather than a flat, they could decrease the number of privately rented households with children,” added Dr Giray Aksoy.

Table - 14 places where house prices are rising fastest for first-time buyers

 

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