It’s no secret that children from wealthy families have the upper hand when it comes to success—money and connections have historically helped them Breaking into Hollywood,even top management. Now, new research shows that British parents who benefited from the UK’s housing boom three decades ago set their children up for later success.
At the turn of the 21st century, UK house prices rose dramatically: costs rose from four times people’s annual income in 1995 to eight times in 2010. Homeowners then enjoyed a windfall, which led to greater housing wealth and high-paying jobs for their children. Recent research from Institute for Fiscal Studies. On the other hand, low-income renters face new affordability challenges.
“The housing boom means huge wealth gains for some families but not others,” Report notes. “Our findings suggest that housing wealth, independent of other factors such as parents’ skills, can have a significant impact on inequality in the next generation.”
To put wealth distribution into perspective, the research found that for every £100,000 ($133,800) of additional wealth a wealthy parent had, the family’s assets increased by £15,000 ($20,000) by the time the children were in their 20s. It dramatically increases the social mobility of rich kids – who have the wherewithal to move to high-paying jobs in London – while the children of renters are deprived of the chance to build generational wealth.
Likewise, in the U.S. it is higher house price Providing parents with additional funds to invest in their children leads to higher wages than for children of renters.
Why children of parents with property booms have an advantage
Children of wealthy homeowners benefited, the study found, regardless of what job their wealthy parents held or degrees they held. A key reason they were able to reap tens of thousands of dollars in wealth gains was location; those who benefited most from the property boom owned property in London, or were able to move to the capital, which was filled with better job opportunities.
“An important explanation for this finding is that children of parents who are more exposed to rising house prices are more likely to own a property in London – the UK’s most expensive property market,” the report explains.
“Part of the reason for this is that people whose parents fared relatively well during the house price boom but grew up outside London are increasingly inclined to move to London.”
Children of parents who fared better during the housing boom were less likely to work in middle-income jobs outside the UK capital, research has found. Instead, they tend to work in higher-paying urban occupations compared to family renters.
However, these benefits are not evenly distributed among the children of these housing-rich families. Their sons were most likely to get jobs at the top of the income distribution, while there was “no significant effect” on daughters. The study found that “parental wealth in particular helps boys gain better labor market opportunities.”
UK housing affordability and wage stagnation
While rich kids have gained wealth and career advancement from their parents’ success in the property boom, many in the UK have given up on buying a house on extremely low wages.
UK property Offers the worst value for money In developed countries, according to a 2024 analysis by The Resolution Foundation. Research has found that not only are housing costs in the UK more expensive relative to general prices than in any OECD country, but homes in England are even more crowded than those in New York City. UK average house price Currently resting at Approximately £270,000 ($361,100). Renters also face an affordability crisis: UK rents will soar 25% in the next four years, property group Hamptons International says Expected to be 2023.
“The UK’s housing crisis has been going on for decades, with successive governments failing to build enough new homes and modernize our existing homes,” said Adam Corlett, chief economist at the Resolution Foundation. Tell Bloomberg. “Now that has to change.”
But as housing costs rise every year, British workers have not seen the same rise in their annual wages, especially young people at the bottom of the totem pole. Average salary for graduates in the UK less than 30% That was 15 years ago, according to government data analyst Bloomberg.
Gen Z are paid around two-thirds of what their Millennial peers are at the same career stage, leaving many rethinking whether they can make it in the UK A quarter of Britons are aged between 18 and 30 explain According to one person, they may leave, with many blaming a lack of affordable housing and the high cost of living. Learning from 2025 Adam Smith Institute.