It’s no secret that the children of wealthy families have an upper hand in success—money and connections have historically helped them break into Hollywood, and even the C-suite. Now, new research shows that U.K. parents who reaped the rewards of the country’s housing boom three decades ago set their kids up for success down the line.
Around the turn of the 21st century, the U.K. witnessed a dramatic surge in housing prices: the costs rose from four times peoples’ annual earnings in 1995, to eight times by 2010. Homeowners subsequently enjoyed a wealth windfall, and it resulted in their kids receiving more housing wealth and higher-paying jobs, according to recent research from the Institute for Fiscal Studies. Lower-income renters, on the other hand, were faced with new affordability challenges.
“This property boom meant enormous wealth gains for some households but not others,” the report notes. “Our results show that housing wealth, independent of other factors such as parents’ skills, substantially affects inequality in the subsequent generation.”
To put the wealth divide into perspective, the study found that for every £100,000 ($133,800) of extra property the wealthy parents had, the children were £15,000 ($20,000) better off in household assets when they reached their late 20s. It catapulted the social mobility of rich kids—who had enough funds to move to high-paying jobs in London—while the children of renters were blocked from generational wealth opportunities.
