Do Rising House Prices Lead to an Increase in Birth Rates?

27th February 2014 posted in Property News

Do Rising House Prices Lead to an Increase in Birth Rates?

Research at the University of Maryland has found that there is a link between rising house prices and the number of births taking place. The study revealed that for every £6000 that is added to the total value of a property, birth rates increase by five percent.

The average price of a home in Britain has risen by a whopping £14,000 in the past year, meaning that we could well be on the verge of another baby boom. The last baby boom took place during the recession, but the country could be about to receive a whole second wave of new babies due to the recovering economy.

There was also an interesting correlation between birth rates and home ownership. Those who rent their home tend to have less kids and their birth rate actually drops by 2.4% when house prices are increased, yet the opposite was seen with home owners.

The study suggests that this link is down to rising equity in homes, leading couples to feel much more secure about their financial situation and enabling them to plan ahead and afford to start a family or have another child.

Researchers Melissa Kearney and Lisa Dettling undertook the research based on urban areas in America, but it is likely to have the same affect in all western countries. Melissa said of the study:

"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.

"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."

In Britain, the last baby boom was down to both immigration and the decision by couples to have more kids instead of both returning to work. This five year birth rate increase was then associated with the economic down turn in 2012, however the Office for National Statistics has disclosed in the last few days that actually the number of pregnancies that took place in 2012 fell in every age group but the over 35s.

House prices have increased rapidly over the past few years with the average price increasing by 5.4% in the last 12 months. The demand for houses has also grown a lot with couples receiving help from schemes such as Help to Buy, so the baby boom may soon be upon us.