Around the turn of the 21st century, the U.K. witnessed a dramatic surge in housing prices: The costs rose from four times people’s 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 twenties. 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. 

Likewise, in the U.S. higher house prices provide parents with additional funding to invest in their children, resulting in higher salaries than the children of renters.

Why the children of property-boom parents have an upper hand 

It didn’t matter what wealthy parents did for work, or what degrees they had: The study found the kids of rich homeowners benefited regardless. And a key reason why they were able to secure tens of thousands of dollars in wealth gains is because of location; those who benefitted most from the housing boom owned property in London or were able to move to the capital city brimming with better job opportunities. 

“An important explanation for this finding is that the children of parents more exposed to the house price boom were more likely to own in London—the most expensive property market in the country,” the report explains. 

“This is partly explained by an increased tendency of people whose parents did relatively well out of the house price boom, but who grew up outside of London, to move to the capital.”

The children of parents who fared better in the housing boom were less likely to take on middle-paying jobs outside of the U.K.’s capital, the study found. Instead, they were inclined to funnel into higher-paying occupations in the city compared to their family renter counterparts. 

However, the benefits have not been equally distributed among the children of these housing-rich families. Their sons were the most likely to secure jobs at the top of the earnings distribution—meanwhile, there was “no significant effect” with the daughters. The study found that “wealth from parents may help male children in particular access better labour market opportunities.”

U.K.’s housing affordability and stagnating wages 

While rich kids are reaping wealth and career gains from their parents’ housing boom success, many in the U.K. have given up on buying a home with their abysmal salaries.

U.K. property offers the worst value for money in the developed world, according to a 2024 analysis from the Resolution Foundation. Not only are U.K. housing costs more expensive relative to general prices than in any OECD country, the study found, but homes in England are even more cramped than those in New York City. The average house price in the U.K. currently rests at about £270,000 ($361,100). And those who rent are also up against an affordability crisis: Rent in England is set to skyrocket by 25% in the next four years, real estate group Hamptons International predicted in 2023.

“Britain’s housing crisis is decades in the making, with successive governments failing to build enough new homes and modernize our existing stock,” Adam Corlett, principal economist at the Resolution Foundation, told Bloomberg. “That now has to change.”

But as housing costs increase every year, U.K.’s workers aren’t seeing the same bumps in their annual salaries—especially young people at the bottom of the totem pole. The average salary for working-age U.K. graduates is 30% lower than it was 15 years ago, according to government data analyzed by Bloomberg. 

Gen Zers are getting only around two-thirds of the pay their millennial counterparts received at the same career stage, and it’s causing many to reconsider if they can even succeed in the U.K. One in four Britons between the ages of 18 and 30 said they might leave, with many pointing fingers at the lack of affordable housing and high cost of living, according to a 2025 study from the Adam Smith Institute.