Parents shoulder cost of first homes
PARENTS in East Anglia are being forced to spend their retirement kitty on helping their children get on the property ladder, a new survey has found.At a time when they should be preparing to put their feet up, many are being forced to dig deep into their pockets to help their offspring buy their first home.
PARENTS in East Anglia are being forced to spend their retirement kitty on helping their children get on the property ladder, a new survey has found.
At a time when they should be preparing to put their feet up, many are being forced to dig deep into their pockets to help their offspring buy their first home.
Bradford & Bingley's third annual First Time Buyer Report found 39% of first time buyers in the region receive help from their parents, while more than 20% are working overtime to save extra cash.
Colin Girling, of the Suffolk branch of the National Association of Estate Agents, agreed with the findings.
He said: “Parents and grandparents are making a contribution to try and help their children buy something. A lot of the prices would be beyond their reach otherwise.
“When you look at how the prices have gone up, incomes haven't matched that. There's a lot of competition among the first time buyers' price range so that's keeping prices up.
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“And there are not enough houses for up to £130,000 to satisfy demand. There are a lot of first time buyers who can't afford £100,000 so they're having to find the money somehow.
“It's a case of going to good old mum and dad and grandparents for most people wanting to get on the property ladder.”
Peter Wolter, manager at Your Move in Ipswich, said: “We are seeing more evidence of parents releasing equity from their property to pay for deposits but whether or not they have to dip into their retirement fund I couldn't say.
“In Ipswich itself it is a little less common because house prices are lower than in Bury St Edmunds or Colchester but in general parent assisted buying is on the rise.”
Simon Theaker, director at Coakley and Theaker in Bury St Edmunds, said: “We have had times when parents have stumped up deposits for their children. I don't know if it's necessarily from their retirement money but certainly it does happen.
“I wouldn't say it was new trend either because parents have always tried to help their sons or daughters get on the property ladder.”
Graham Rich, chairman of Forum 55, a group that represents the interests of the over 50s, said the issue was something he was aware of and felt certain many parents would offer their children financial support if they needed a helping hand to buy a property.
The survey, based on a sample of more than 1,500 first time buyers, found nearly half of parents in the east gave their children a deposit for their first home.
Increasingly, parents are making lifestyle changes to help their children afford their first home. Almost one in seven have dipped into their savings, while a further 12% of first time buyers in the region have or will move back into their parents' home while saving.
Not all first time buyers are relying on their families though, with more than 12% taking on second jobs to find the extra money.
Some are also making sacrifices to their lifestyle in order to save harder. Some 54% are spending less on going out to bars, clubs and restaurants and 21% are cutting back on mobile phone bills, TV subscriptions and gym membership.
Meanwhile a new survey for April from Hometrack found house prices in East Anglia were rising at the third highest rate in the country at 0.5%.
Only London, at 1.2%, and the south east, 0.6%, experienced a greater rise during last month.