A study has found that for every 10% increase in house prices, the birth rate falls by 1.3%.
Increasing property prices are causing the number of babies born in England to fall because fewer people can afford to buy their own home and so delay starting a family, a new report claims.
A study conducted by the European Bank for Reconstruction and Development suggests that for every 10% rise in house prices, the birth rate drops by 1.3%.
The opposite is true for people who own their own home, with a 10% house price increase leading to a rise in the number of births by 2.8%. But among renters, the same increase causes a birth rate decline of 4.9%.
Given that there are around 700,000 babies born in Britain each year, the figures suggest that increasing house prices could potentially reduce the number by more than 7,000.
“This may be because the increased wealth of homeowners allows them to start a family, while private renters postpone having kids until they are on the property ladder,” said researcher Dr Cevat Giray Aksoy, who presented the findings from the study at The Royal Economic Society’s annual conference recently held in Bristol.
He added: “Couples put off having children because they aren’t able to afford suitable accommodation.
“These findings support the notion that housing costs exert downward pressure on the fertility outcome of young adults and that there is a connection between getting on the property ladder and building a family.”
The fact that young people under the age of 30 are disproportionately affected by property prices may partially explain why the average age at which mothers have their first child has been gradually increasing and now stands at 30 years old.
The study also suggests that the government’s Help-to-Buy ISA’s maximum purchase cap of £250,000, and £450,000 for London should be scrapped because it limits the size of a home, meaning couples often cannot afford more than one bedroom, thus preventing, or restricting family growth.
“If such government schemes help people not only to get a foot on the housing ladder but also afford a family house rather than a flat, they could decrease the number of privately rented households with children,” added Dr Giray Aksoy.