"Financial support from parents is an important ticket into the housing market. And because housing is the most important route to wealth for most people, an early advantage in life can lead to large differences in wealth later on," says Ragnar Juelsrud.
He is an Associate Professor at the Department of Economics at the University of Oslo. Together with four colleagues, he has used registry data from Statistics Norway and the Norwegian Mapping Authority to follow parents and children across the entire Norwegian population from 1992 to 2017.
In the article The housing channel of intergenerational wealth persistence, Juelsrud and his co-authors Ella Getz Wold (BI), Knut Are Aastveit (Norges Bank and BI), Eirik Eylands Brandsaas (Federal Reserve Board), and Gisle James Natvik (BI) show that the gap in homeownership between young people with wealthy parents and young people with less wealthy parents has increased markedly. In the study, the researchers divide parents into two groups based on financial wealth-that is, bank deposits, shares and mutual funds, not income.
"In 2005, the difference in homeownership at age 30 was around ten percentage points between the two groups. By 2017, the gap had increased to around 18 percentage points," he says, stressing that this amounts to almost a doubling in just over ten years.
The study data extend to 2017. Public statistics do not suggest that it has become easier for young people without assistance since then: according to Statistics Norway's 2023 living conditions survey, approximately one in four households that had bought a home during the previous four years had received help from their parents-a proportion that has remained fairly stable since 2012. Among homebuyers under the age of 30, almost half received parental support, Statistics Norway's 2015 survey showed.
A common objection is that children of wealthy parents are also more likely to have higher education and good incomes themselves, and that this is what explains the difference.
"We have accounted for the young people's own income, education, wealth, place of residence, and whether they live with a partner, as well as for the parents' income, education, and place of residence. These factors explain around half of the gap, especially the young people's own income. The other half is related to the parents' wealth itself," says Juelsrud.
Equal willingness, unequal ability
The researchers also conducted a smaller online survey among 240 parents over the age of 40 in 2023.
"Around eight out of ten parents answered that housing is what they would most like to help their children with financially, regardless of how much money they have. But while almost nine out of ten of the wealthiest parents have helped, or could imagine helping, their children enter the housing market, this applies to fewer than four out of ten of those with the least wealth. The difference is therefore about ability, not willingness," says Juelsrud.
Housing stands out: parents are much less likely to support their children's consumption or give them shares and mutual funds. Housing is seen as a sensible investment.
From cash gifts to joint purchases
The study documents four ways in which parents help their children enter the housing market. All are used more frequently by parents with substantial wealth:
- They transfer money from savings, shares, or mutual funds.
- They take out additional loans against their own home and use the money to help the child.
- They buy the home together with the child.
- They own a home that they sell to the child-often at a price well below what they would have received in the market.
When parents sell a home to their own children, the price is on average more than 25 percent lower than for comparable homes sold on the market. This corresponds to around NOK 740,000 in 2015 prices, or approximately NOK 1 million in today's monetary value.
Together, these four channels explain more than half of the part of the difference that is related to parents' wealth. The most important individual channel is that parents borrow more against their own home. The rest is probably due, among other things, to loan guarantees from parents and transfers that are not visible in the data.
However, according to Juelsrud, help with investing in housing amounts to far more than the security of owning one's own home.
"Owning your own home is in itself a source of wealth. Because the home is largely debt-financed, price growth generates high returns on equity. And the earlier you enter the market, the more years of price growth you benefit from," says Juelsrud.
The researchers have also developed an economic model to calculate what this means over the life course. The calculations suggest that the opportunity to own a home greatly reinforces the importance of parents' wealth for their children's wealth in their early forties.
"Young people with less affluent parents work, pursue education, and also enter the housing market, but it often takes longer. Many catch up in terms of homeownership, but the wealth advantage can persist for a long time," says Juelsrud.
Large differences between urban and rural areas
In the study, Ragnar Juelsrud has not specifically examined differences between urban and rural areas, but he points out that the major house price growth of recent decades has taken place in the large cities.
According to Statistics Norway's house price index, prices for existing homes in Oslo and Bærum have become almost 13 times higher since 1992, compared with just over eight times higher for the country as a whole. Adjusted for general inflation, house prices in Oslo and Bærum have become almost six times higher, compared with almost four times higher nationwide.
Norges Bank has calculated that a 25-to-35-year-old with a median income in the Oslo region could buy 15 percent of the homes there in 2013, with a loan equal to five times their income. In 2023, the share had fallen to 5 percent. In the rest of the country, purchasing power has remained relatively stable.
"Those who have parents with homes and wealth in the cities where prices have risen the most have a major advantage," says Juelsrud.
At present, the Oslo market is moving more slowly: according to Eiendom Norge, prices in Oslo fell by 1.0 percent in September, and there is a record number of unsold homes. Juelsrud points out that homeowners have benefited greatly from price growth over time, but that this is not a law of nature. Around 1990, house prices fell sharply.
According to the researcher, the fact that some people get a head start in terms of housing and wealth-simply because their parents have money-is problematic.
"One obvious proposal is to reduce the equity requirement further. It was reduced from 15 to 10 percent in 2025. But our calculations suggest that a lower equity requirement does not necessarily help those without parental support the most. For young people who have received some help, their savings may suddenly be enough, while those without help are still a long way off. In addition, people may take on more debt than they are able to service," says Juelsrud.
He believes that the most important thing is to build more homes where people want to live, so that price growth is lower.
"Lower house price growth makes it less decisive who entered the housing market early, and it weakens the advantage of having wealthy parents," he says.
About the study
Data: Register data from Statistics Norway linked with housing transactions from the Norwegian Mapping Authority for the entire population, approximately 1.5 million households in the period 2004-2017.
Parents' wealth: Financial wealth (bank deposits, shares, and mutual funds) when the children were around 20 years old, or in the year before a home purchase.
Method: A statistical decomposition; an analysis that uses fluctuations in international stock markets to isolate the effect of parents' wealth; a survey of 240 parents; and an economic life-cycle model.
Status: Working paper, under revision for the Journal of Financial Economics.
