‘Rising house prices may boost fertility for homeowners, but slash fertility amongst renters’

"International evidence shows that housing markets have substantial effects on fertility"

Some researchers from the Adam Smith Institute have noticed a correlation between property ownership and parenthood in the UK: tenants have far fewer children compared to home-owners.

“International evidence shows that housing markets have substantial effects on fertility,” says the ASI’s Andrew Sabisky, claiming that “rising house prices may boost fertility for homeowners, but slash fertility amongst renters — between 1996 and 2014 157,000 children were not born due to the cost of living space.” Many people are choosing not to have a first or additional child because they can’t afford the space, it’s claimed.

That’s prompted the free market think tank to publish a paper in which it argues that “housing is the solution to Britain’s fertility crisis”.

The UK – along with most of the developed world – has an ageing population, “meaning a falling ratio of workers to dependents”. While recent immigration has “propped up the supply of workers and kept the population pyramid in shape”, the Institute warns that Brexit might thwart such balancing – so “there is a clear need to raise birth rates.”

Home ownership, meanwhile, has been edged out of reach of many younger sorts as prices escalate. The average first-time buyer in Britain is now over 30. Property sizes have also shrunk in recent decades; the report cites Savills’ research on this: “Homes built prior to 1919 are, on average, 102 metres squared, whereas those built between 1981 to 1990 are just 83.9 metres squared. Those built since 1991 are somewhat larger, to 91 metres squared.”

And then there’s a bit of a leap: “Intuition would suggest a bidirectional relationship between the trends in dwelling size and fertility.”

Here’s the thinking behind that intuition that the economics of the housing market affects fertility:

  • Rising rents typically cut fertility amongst renters.
  • Rising house prices probably raise fertility among existing homeowners; they certainly enable couples to have children earlier than they otherwise would. The rising value of their home gives them greater confidence that they will be able to afford another child.
  • Moving to a larger property probably has a positive causal effect on fertility, though most of the correlation between moving to a larger property and fertil- ity is non-causal and is explained by selective moves (Kulu & Vikat, 2007).
  • More expensive housing also shifts tenure towards renting and away from home-ownership: higher house prices means higher deposits, and higher rents make deposits harder to save for. In the ten years between 2004 and 2014 homeownership fell from 60% to 35% among 25-34 year olds—the key child-bearing demographic. This amplifies the negative effect of higher rents.

“Freemarket, pro-development housing reforms are likely to raise fertility and ensure that a high standard of living and healthcare remains affordable,” concludes the Institute.

Read the full report here (PDF)