European Views | Recent numbers from the UK underscore just how much first-time British homebuyers rely on financial help from parents and families, with the ongoing coronavirus crisis making the gap between haves and have-nots even more extreme when it comes to financing for buying property. Research carried out by Legal & General reveals 23% of post-COVID housing transactions in 2020 will be supported by the Bank of Mum and Dad, up from 19% last year. This comes as little surprise, given that British lenders are restricting access to mortgages, demanding larger deposits, and refusing to lend to some furloughed buyers.
The problem is hardly one confined to the UK. Across Europe, real estate markets which were already daunting for lower-income buyers – like Germany or Portugal – are set to become even more gruelling because of new economic stresses caused by the pandemic. 40% of young people in Europe who are at risk of poverty consider prohibitive housing costs one of the chief contributors to their plight, while a similar percentage of low-income earners already struggle with overcrowded living situations.
In the short term, governments can offer initiatives and grants to alleviate the strain on younger and more disadvantaged buyers, allowing them to take their first step onto the property ladder. In the long term, however, Europe may require a more wholesale reassessment of urban development models that prevent people from leaving overpriced and overcrowded metropolitan centres and