The mid 1990s to the mid 2000s saw a boom in house prices;
average house prices rose from around four times annual earnings
in 1995 to eight times by 2010. This created enormous wealth
gains for some households but not others, and so a big increase
in wealth inequality between homeowners and renters, as well as
between homeowners in different parts of the UK. Our research
shows that these gains led to children of homeowners in booming
areas having relatively more housing wealth themselves in their
late 20s to late 30s. They were also more likely to own homes in
London and the wider South East than other children. Male
children of parents who did better in the housing boom were also
more likely to move into the most highly paid jobs than other
male children (though we do not find the same effects for female
children).
Peter Levell, a Deputy Research Director at the Institute
for Fiscal Studies, said:
‘The surge in house prices from the mid 1990s until the mid 2000s
created significant and lasting inequalities – not just between
people at the time, but among their children as well. Studying
this period of booming house prices helps us to separate the role
of housing wealth gains in child outcomes from other reasons the
children of wealthier parents might do better (such as the
intergenerational transmission of skills or family connections).
Our results imply that policies that affect the size of housing
wealth gains – including changes to taxation or housing supply in
booming areas – would affect inequalities in future generations
as well as in the current one.'
ENDS
Notes to Editor
How the 1990s and 2000s property price boom reduced social
mobility is an IFS briefing by Peter Levell.
