Soaring house prices lead to increase in birth rate, research suggests
02-27-2014
For with every £6,000 added to the value of a property birth rates increase by five per cent, University of Maryland researchers say
Estate Agent signs
Booming house prices makes couples feel wealthier, even if they do not have the money in their hand, and so they believe they can afford to have a child Photo: GETTY
By Sarah Knapton, Science Correspondent
The ‘recession baby boom’ may be coming to an end, but Britain could be about to see a second wave of births, fuelled by the recovering economy, researchers believe.
Academics have found a link between rising house prices and birth rates.
For every £6,000 added to the value of a property the number of babies born also rises by 5 per cent.
The average British home has increased by £14,000 in the past 12 months indicating that we could be about to see a new baby boom.
Researchers at the University of Maryland believe the phenomenon occurs because rising equity in homes make couples feel more secure and settled and so they begin to plan ahead.
As booming house prices make them wealthier they believe they can afford to begin a family or have another child.
Researcher Melissa Kearney said: "If price increases are viewed to be permanent and homeowners view their home as a store of wealth, an increase in house prices can be thought of as an increase in (perceived) wealth for existing homeowners.
"This could lead to an increase in the demand for children. When house prices
"Our results provide clear empirical support for the idea that house prices impact birth rates in a statistically significant and economically meaningful way.
"We find that changes in house prices exert a larger effect on current period birth rates than do changes in unemployment rates."
The study found a correlation in urban property markets and birth rates in the US but the effect is likely to be the same in all western countries.
In Britain, the economic downturn was associated with a five year rise in birth rates up until 2012.
This boom was attributed to immigration and a generation of "recession babies", with couples choosing to have a second or third child rather than both return to work.
But this week the Office for National Statistics disclosed that in 2012 the number of pregnancies in England and Wales fell in every age group except the over 35s.
In 2012, there were an estimated 884,748 conceptions among women of all ages, compared with 909,109 in 2011, a fall of 2.7 per cent.
However rising property prices could reverse that trend. House prices in Britain have been rising substantially in recent years. Nationwide now puts the average house price at £175,000 although Rightmove say the figure is closer to £250,000.
Overall, the ONS said, house prices were now 1.6 per cent higher than in the pre-financial crisis peak in January 2008.
Based on the number of mortgage completions house price inflation was 5.5 per cent in in 2013.
A poll of 27 economists and analysts, taken in the past week, predicted that house prices will rise on average by another 7 per cent this year.
The Bank of England slashed interest rates to a record low 0.5 percent nearly five years ago, making borrowing cheap for those who can get a mortgage.
Growing demand pushed asking prices 6.9 percent higher in the four weeks to February 8 compared with a year earlier, the fastest pace in more than six years, property website Rightmove said last week.
Some of that demand has been stoked by a government programme that backs low-deposit mortgages. Called Help-to-Buy, the scheme is aimed at making it easier for first-time buyers to own a house.
However despite government help, the increases have prevented many young couples from being able to buy homes. In the 25-34 age group, only 40 per cent are owner occupiers and 60 per cent rent or live at home.
The recovery has created more jobs for both men and women which means many will also delay starting a family while they get their career on track.
The study was published in the Journal of Public Economics.