11th May 2022

30 years of rising houses prices: How to help secure your child’s future

It is no secret that the cost of property in the United Kingdom has been on the rise for many years. In fact, according to recent research, the average price of a home in this country has increased from £50,000 in 1990 to £250,000 in 2021 —  according to the Office for National Statistics (ONS).  If you have children and are concerned about how they will fare in the property market when they are ready to fly the nest, many parents consider starting investing with a Junior ISA. In this piece, we will explore how property costs have risen over the past three decades and explore how you can start saving for your child’s future today.

Why is property so expensive in the UK? There are many factors that have contributed to the rising cost of property in the United Kingdom. A large reason is population growth. According to the ONS, the population of England increased from 49.41 million in mid-1991 to 56.06 million in mid-2019 – an increase of 14%. By 2040 the ONS predict the population of England will be 59.8 million. In parallel, the great swathes of house building seen in the 1930s and 1960s have never been repeated on such a scale as they were. This has led to a perfect storm of restricted supply and increased demand. Coupled with the ‘race for space’ seen during the height of the pandemic this has seen prices, especially in commuter towns, suburbs and rural locations rise even higher.

So how can you equip your child with the tools to face this challenging market? Most people will not be in the fortunate situation of being able to simply part with the up to 10% deposit most lenders will require on a property, especially if prices keep rising. One solution is to start saving for your child, using a Junior ISA. There are two types of Junior ISA, Cash ISAs or Investment ISAs. A Cash ISA is much like a savings account, typically with a fixed rate of interest. A Junior Investment ISA is invested in stocks and shares, much like a pension and, over the long term, will generally deliver a better return than the Junior Cash ISA alternative. It’s also worth bearing in mind that cash does generally not beat inflation and, to keep pace with rising property prices a suitable, well-diversified investment is the better option over the longer term. How much risk you take is up to you; choose from Lower risk, Medium or Higher risk investment options.

A Junior ISA, be it a Cash or Investment product,  can only be accessed by the child named on the account. This means that the funds will be locked away until the child reaches adulthood, at which point they can access the investment which could go towards the cost of a first home. Here at the Children’s ISA, we have developed a handy tool for you to calculate what their investment could be worth. As you can see, like with most investments, the sooner you can start saving the better. A Junior ISA, by the Children’s ISA, is simple to open — everything can be done with ease online. What’s more, it’s not just you that can pay into your child’s account. Friends and relatives can make one-off or more regular contributions with ease, all online and with the click of a button. If you have any questions about a Junior ISA from the Children’s ISA, please feel free to get in touch.

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The website and the information contained therein should not be regarded as an offer or solicitation to conduct investment business in any jurisdiction other than the UK. Past performance is not necessarily a guide to future performance and the value of your investment may fall as well as rise, and any income received in the form of dividends may fluctuate. You may not get back the full amount when the account is closed. If paying regular monthly contributions please bear in mind that if contributions are not maintained you will be less likely to achieve the investment amount that was originally projected.

The information on this website is not advice, it is provided solely to enable you to make your own investment decisions. The investments and /or investment services referred to may not be suitable for all investors.

The Children’s ISA Limited is authorised and regulated by the Financial Conduct Authority. (FCA No: 563043)
The Children’s ISA Limited is a company registered in England and Wales. Registered Company Number: 07486015

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