"Around the turn of the 21st century, the U.K. witnessed a dramatic surge in housing prices: the costs rose from four times peoples' annual earnings in 1995, to eight times by 2010. Homeowners subsequently enjoyed a wealth windfall, and it resulted in their kids receiving more housing wealth and higher-paying jobs, according to recent research from the Institute for Fiscal Studies. Lower-income renters, on the other hand, were faced with new affordability challenges."
"To put the wealth divide into perspective, the study found that for every £100,000 ($133,800) of extra property the wealthy parents had, the children were £15,000 ($20,000) better off in household assets when they reached their late 20s. It catapulted the social mobility of rich kids-who had enough funds to move to high-paying jobs in London-while the children of renters were blocked from generational wealth opportunities."
Around the turn of the 21st century U.K. housing prices rose from about four times annual earnings in 1995 to roughly eight times by 2010, producing large homeowner wealth gains. Homeowner parents passed along housing wealth that translated into greater household assets and access to higher-paying jobs for their children in their late 20s. For every £100,000 of extra parental property wealth, children were about £15,000 better off in household assets. Wealth transfers enabled some young adults to move to high-paying job markets such as London, while children of renters faced affordability barriers and reduced generational mobility. Similar patterns appeared in the U.S., where higher house prices allowed homeowners to invest more in their children.
Read at Fortune
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