Brickonomics

A couple of years ago, Shelter released some research by Bethan Thomas and Danny Dorling which argued that the housing market was becoming one of if not the main driver of inequality in the UK. “If current trends continue”, they said, “in 30 years time the ten per cent of children in the wealthiest areas will have access to more than 100 times the housing wealth of those ten per cent of children growing up in the poorest parts of the country”. This matters because

Housing wealth gives families access to greater security and opportunity.

• Parents can access housing wealth (through downsizing or remortgaging) and help their children financially. Housing wealth gives families greater borrowing power. Children receive a windfall on their parents’ death.
• Children born into families with no housing wealth inherit nothing and have little financial help throughout their lives.

A child will not be able to earn their way out of this disadvantage – a social position determined by who their parents are and, mainly, by where they happen to live – very easily. For children born into families with low housing wealth or none at all, there will be large parts of the country to which they cannot consider moving in the future. This geographical immobility will affect children’s life chances and will impact on Britain’s economic well-being.

And now here’s some fresh evidence:

Second homes for students boost housing market

Published: 08/08/2006 – 10:39:26 AM

House sales have been boosted by parents buying properties for their children while they were at university, new research shows today.

Around 83,000 homes were bought on behalf of students last year, a 26% increase since 2000, according to the study by finance firm Direct Line.

The number of houses occupied by students was predicted to reach 100,000 by the year 2010.

The so-called university effect helped increase the number of “second properties” to 2.6 million, up from 2.3 million five years ago.

Around 1.6 million of the second properties were buy-to-let, while others included holiday homes and work bases.

Andrew Lowe, head of home insurance at Direct Line said: “The continued boom in house prices, the rise in parents buying properties for their children and the growth in tele-working are among the key drivers of the UK’s buoyant second properties market.”

There’s a double effect here: in buying second homes for their student children, wealthy parents are not only giving them an educational advantage but, because housing supply is quite inelastic, they’re creating further price pressures and pushing housing further out of the reach of poorer families, further reinforcing inequality.