Tuesday, 19 July 2016

There will be no bank of Mum and Dad for the next generation

Housing: a perpetual boom.

A common theme in the news (although perhaps not quite as common as it ought to be) is the issue of the cost of housing and the fact that many young people rely heavily on financial assistance from parents (and sometimes grandparents). A recent study (see article in the Independent here) shows that even renters are borrowing from their parents to meet the soaring costs of housing in the UK.

We also know that people are now earning less than their parents' generation. So how are the next generation going to be able to afford to buy or even rent a home?

Clearly what is currently being protected at all costs is house prices. Baby boomers are, albeit unintentionally, keeping the value of their own homes high by helping their children to buy at those inflated prices.

Later parenthood and postponement of retirement.

Housing is not the only issue. It is well-known that many parents rely on grandparents for childcare, partly because of the rising cost of childcare, partly because of working commitments - which is often as a result of high house prices and mortgage commitments.

We also know that people are having children later in life, again often as a result of lower wages and higher cost of housing. So the next generation will find it harder to call on grandparents for childcare because grandparents will be significantly older. For example: my parents became grandparents for the first time in their late forties and for the final time in their sixties. If my son becomes a parent at the same age I did, I will be in my 70s and my health may hinder my ability to help with childcare. Add in the huge increase in obesity and conditions such as diabetes and future grandparents may be less fit than their own.

On top of this, given the much-discussed state pensions shortfall which almost certainly means retirement age being put further and further back, grandparents who are still fit and healthy enough may be unable to help with childcare because they will still be working.


We can't wait for the issues of falling wages and rising cost of housing and childcare to present themselves because then it will be too late to do anything about it.

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