Kováts Bence: The Financialisation of Housing and Housing-related Family Support in Hungary
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3. The global rise of parental support in housing: trends and determinants
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3.3. Housing-related parental financial support
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3.3.3. Microdeterminants of housing-related intergenerational financial transfers

3.3.3. Microdeterminants of housing-related intergenerational financial transfers

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Determinants of financial support have been explored by a number of studies analysing national datasets. In these analyses, the impact of a variety of characteristics of children and parents were measured. In the following, findings from the analyses of financial support in the US, the Netherlands, Norway and Czechia are presented.

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Mayer and Engelhardt (1994, pp. 15–17) examined the impact of characteristics of young adults on receiving support for the down payment of their mortgage in US cities. Besides their finding that need (measured in income), housing prices and age significantly affect the share of down payment covered from gifts, they also recognised that household size has a positive effect on the receipt of a gift.

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Mulder and Smits (2013) studied characteristics of both parents and young adults influencing parental home ownership support on Dutch data. They found that the father’s socio-economic status, mother’s employment status at the child’s age of 15, university degree of the father, home ownership of parents, age difference between the mother and the child had a positive effect on home ownership support, while the death of one parent before the age of 18 of the child, the divorce of parents and the number of siblings had a negative effect. Among the variables pertaining to characteristics of the child, university degree and marriage have a positive effect, while distance between the child’s current place of residence and the place of residence at their age of 15 have a significant negative effect.

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Regarding young adults’ characteristics, the study highlights the importance of merit in providing home ownership support exemplified by the impact of child(ren)’s marriage or university degree. Authors also highlight the importance of tenure socialisation: those parents provide financial support for housing purchase who themselves reside in an owner-occupied dwelling. At the same time, evidence does not support the importance of need as, contrary to Mayer and Engelhardt’s (1994) finding, income and socio-economic status of the child does not have a remarkable influence on home ownership support (Mulder and Smits, 2013).

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Mulder and Smits also looked at differences between the transfer of 5000 euros as a gift from parents to children (either in one amount or in regular payments) ever and home ownership support and found there is no significant difference between factors influencing housing-related financial support and non-housing related transfers. Difference mostly lies in that parameters affecting non-housing related transfers have a higher impact on financial support, and that distance from the parental home affects only home ownership support.

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Gulbrandsen and Langsether’s (2003) Norwegian study found that parents’ income, and both donors’ and recipients’ age are the most significant factors behind the provision of parental financial support. Education, the number of children, receipt of inheritance or a gift from parents, assignment to the norm of helping children and leaving an inheritance, and low income of the child all have a positive effect. Interestingly, Gulbrandsen and Langsether do not find the merit effect significant. University degree of the child or whether they had children did not have a positive effect on the receipt of financial support. Frequent contact with parents also did not affect the provision of support.

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The Czech case study of Lux, Sunega and Kážmér (2021, pp. 1307–1309) reinforces the importance of parents’ home ownership, fewer children, and the reception of financial support from the grandparent generation in young age as characteristics significantly positively influencing financial support. Income of parents, and the education and marital status of the child do not seem to influence the reception of financial support indicating that in home ownership-dominated Czechia financial support for home ownership is the norm and is not dependent on certain qualities or the situation of children. Yet, the tenure socialisation effect proves significant here as well.

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Tenure socialisation is discussed by a number of other studies as well (Helderman and Mulder, 2007; Heath and Calvert, 2013; Druta and Ronald, 2017; Albertini, Tosi and Kohli, 2018; Lennartz and Helbrecht, 2018; Lux et al., 2018; Lux, Sunega and Kážmér, 2021). In the overwhelming majority of countries, parents’ preferred tenure is home ownership, however, as the German case study of Lennartz and Helbrecht (2018) demonstrate, in a unitary rental system characterised by a low home-ownership rate, parents’ preferred tenure is rental housing and they are less willing to support the purchase of a home by their children. The “socialisation effect” of financial support changes even within one country, depending on the prevalence of home ownership or renting in parents’ location (Helderman and Mulder, 2007; Lennartz and Helbrecht, 2018).

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The “socialisation effect” not necessarily relates to tenure. It can even appear in the form of explicit control such as the parents’ right to decide about the furniture and decorations of the dwelling obtained through parental support (Druta and Ronald, 2018). In sum, the four quantitative analyses and further case studies suggest that more affluent parents provide housing-related financial support to their children regardless their need, but not in CEE Czechia. The socialisation of children into the parental tenure also significantly shapes the provision of financial support. Merit (marriage or earning a university degree) was not a significant determinant in all case studies, but might be an important factor if a larger group of countries is considered.
 
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