Consideraciones finales

homeowners experienced a considerable increase in housing wealth (Bastagli and Hills, 2013). In 2014/16, total housing wealth is estimated to be £4.6 trillion in 2014/6, which accounts for two-thirds of total personal wealth at the national level, excluding private pension wealth (Office for National Statistics (ONS), 2018).

Evaluating this historical background in the life course perspective (Elder, 1994; Elder and George, 2016) provides the context to understand how preferences for homeownership have developed in Britain. Today, owner-occupation remains the preferred tenure option in Britain for young people (Clapham, Mackie, Orford, Thomas and Buckley, 2014). Young adults’ homeownership rates, however, continue to decrease due to the affordability issue (Office for National Statistics (ONS), 2016). Unable to own a home, they spend more years renting, as the term ‘generation rent’ encapsulates well. Some are able to enter the housing market with financial support from family, referred to as ‘Bank of mum and dad (BOMAD)’, while others move back to their parental home, which enables them to save on living costs and putting it towards a deposit for a home (West, Lewis, Roberts and Noden, 2017). In this chapter, these two types of support are referred to as direct and indirect financial support respectively; direct support includes inheritances, cash gifts and loans while indirect support is identified through parental co-residence.

The structure of this paper is as follows. The next section discusses the cultural and economic significance of homeownership from the young adults’ viewpoint and describes the affordability issue and the role of parental supports based on existing studies as well as analysing available data. Then, the two research questions are introduced. The WAS dataset is described in detail, followed by analytical strategy and results for each research question. It concludes with a discussion on policy implications and future research opportunities.

4.3

Younger adults’ perspectives on homeownership

Home serves as a focal point for security and stability in one’s life in countries with a strong culture of homeownership (Dupuis and Throns, 1998; Saunders and Williams, 1988). It provides a precise context of a temporal and spatial ‘locale’ (Giddens, 1984) where

4.3 Younger adults’ perspectives on homeownership 108

individuals can ‘place the life course’ (Saunders and Williams, 1988). Therefore, home becomes a crucial aspect of organising young adults’ lives as they form partnerships and start families (Mulder, 2006; Murphy and Sullivan, 1985). Previous studies have shown that most transitions to homeownership are observed among those aged under 45 (Clapham et al., 2014; Cole, Powell and Sanderson, 2016; Köppe, 2017). Moving to homeownership is a milestone life event for British adults, an important step towards ‘settling down’ (PPI, 2018).

Homeownership is also perceived to be economically advantageous as many expect housing wealth to increase as house prices appreciate over time. The rationale is that mortgage repayments contribute to building assets, while rent money is wasted on ‘paying someone else’s mortgage’. The house price boom of the 1990s and 2000s may have shaped this viewpoint, as many obtained substantial capital gains, realised or unrealised (Bastagli and Hills, 2013).2

The notion of ‘going up the housing ladder’ explains how homeownership functions as a means to save for retirement. One would expect that, as a housing asset increases, an existing home can be used to buy a bigger one for a growing family. In the long run, owning a home helps to hedge future housing costs and also presents other options to fund retirement (e.g. downsizing) (Adams and James, 2009; Armstrong, Ebell and Warren, 2017; Crawford, 2018b).3 Regardless of housing tenure, nearly half of young adults aged 25–44 consider that investing in property is the best way to save for retirement, while around three out of ten consider it to be the safest way (see Table 4.1). As the most common form of property investment is homeownership, owning a home may be one of only a few ways that meet young people’s needs for stability and security while providing an avenue to save for the future.

2_{Realised capital gain is the proceeds from a sale transaction and unrealised gain refers to the potential}

profit from a hypothetical sale.

3_{Crawford (2018a) reported that few individuals actually downsize and most of those who does (downsize}

or downvalue) do so due to a lack of financial resources. Studies have reported that homeowners are less likely to move after retirement (Crawford, 2018b) and increase their net income by saving on the housing costs (Frick and Grabka, 2003; Frick, Grabka, Smeeding and Tsakloglou, 2010; OECD, 2013)

4.3 Younger adults’ perspectives on homeownership 109

Table 4.1 Perception of retirement saving options by tenure types (Age 25-44; 2014/16)

Best value for money option for retirement saving

Owners (%) Social renting (%) Private renting (%) Living with Parents (%) All tenures (%) Investing in property 54 39 46 39 49 Paying into an employer

pension scheme 23 22 17 28 22 Investing in the stock market by

buying stocks or shares 9 5 7 5 8 Saving with an ISA* (or other

tax-free savings accounts) 4 11 10 11 7 Paying into a personal pension

scheme 4 6 7 6 5

Saving with a high rate savings

account 3 10 8 6 6

Buying Premium Bonds 0 2 2 (-) 1

Other 1 6 3 5 3

Total 100 100 100 100 100 The safest way to save for

retirement Owners (%) Social renting (%) Private renting (%) Living with Parents (%) All tenures (%) Paying into an employer

pension scheme 41 34 32 41 38 Investing in property 34 25 30 23 31 Paying into a personal pension

scheme 10 13 14 13 12 Saving into an ISA* (or other

tax-free savings account) 7 12 10 10 9 Saving into a high rate savings

account 7 12 10 10 9 Buying Premium Bonds 1 2 2 (-) 1 Investing in the stock market by

buying stocks or shares 1 (-) 1 (-) 1

Other 2 5 4 5 3

Total 100 100 100 100 100

Note: Author’s own calculation using Wealth and Assets Survey (5th wave). The best-value option and the safest option are drawn from survey questions based on 6,009 and 6,095 observations respectively. *ISA refers to an Individual Savings Account, which is a tax-free savings account with a maximum fiscal-year threshold, introduced in April 1999. A fiscal year in the UK starts in April and ends in March in the following calendar year. Monies can be either saved (cash ISA) or invested (share ISA) within the scope of an ISA. Interest income or capital gains obtained within the scope of the ISA is not taxed. The initial yearly threshold was £7,000 since 1999/2000. There was a small increase in 2009/10 by £200. The subsequent increases were more significant; the yearly thresholds rose to £10,200 in 2010/11, to 15,000 in 2014/15 and £20,000 in 2017/18. (-) denotes cells with unweighted counts less than 10. All proportions are cross-sectionally weighted.