Parental financial support for housing: The importance of investment homes and family size

Abstract

As global housing affordability declines among young people, parental financial housing support has become a crucial mechanism for the transmission of family housing wealth. This study aims to assess the influence of parental ownership of primary and investment properties on the mechanism of providing housing support to their offspring. Using data from a representative survey of the New Zealand population, our study reveals that parental ownership of investment properties plays a predominant role in their ability to provide housing support to their children, whereas the ownership of primary residences does not affect this support. Interestingly, we find that that this effect remains significant even after controlling for parental household income and savings. This suggests that the impact of investment properties on housing support is not solely attributed to their contribution to income or savings. Furthermore, our findings indicate that parental ownership of investment properties has a more pronounced impact on providing substantial housing support. Additionally, wealth inequality in housing transmission appears to be more prominent in households with multi-child. As the effect of parental housing are significant in multi-child families, an effect not observed in one-child households. These findings reveal the inequality in the transmission of housing wealth through the mechanism of parental housing support.