Parents are pouring £2bn a year into the property market to help their children buy their first home, leading to increasing wealth disparity, research reveals.
The survey by the housing charity Shelter said the figure was almost double what the government spends annually on building affordable homes, and called for fresh funds to construct the 250,000 extra homes estimated to be needed in the UK.
Shelter commissioned Natcen Social Research to look at the impact of the so-called "bank of mum and dad" on the market. Researchers found that between 2005 and 2012, three in 10 first-time property purchases were supported by either a gift or loan from the buyer's family or friends.
Parents were the biggest source of support, with more than a quarter of first-time buyers since 2009 receiving help worth an average of £17,000, more than half of the typical £28,000 deposit.
If the research, which was based on more than 10,000 people's experiences, is extrapolated across the UK, a total of £2bn a year is being added to the housing market each year by parents alone.
The figures show the number of people seeking financial help with their purchase moved up a gear after property prices peaked in most areas of the country, and the credit crisis set in.
Family and friends have stepped in to provide with deposits following lenders' withdrawal from the 95% and 100% mortgage market following the banking crisis. While in 2005/06, 23% of first-time buyers had loans or gifts from friends or family, that figure increased to 40% in 2009/10, dropping to 27% in 2011/12.
While some parents could help their children without dipping into savings, Shelter said it was concerned that in some cases they were raiding retirement funds or cutting spending to fund deposits.
Roger Harding,Shelter's head of policy, research and public affairs, said the fact that parents had to be reasonably wealthy to help out meant those without a source of cash were lagging behind.
He said: "The concentration of housing wealth is starting to drive up wealth inequality. Before you had compensating factors like right to buy which meant that you could have housing wealth even without a large income, but now there are whole generations left in an insecure private rented sector."
He added: "The average that we found, £17,000, is an awful lot of money for parents to raise for their kids to do something that they were able to do without assistance, suggesting that there is something deeply wrong with our housing system at the moment."
Council of Mortgage Lenders figures suggest banks and building societies are becoming more willing to lend to borrowers with smaller deposits, with the average loan-to-value taken by new borrowers rising to 83% in May.
However, Harding said that parents had still been a big source of help even in the runup to 2007 when credit was easily available, and the fact that house prices were likely to be bolstered by government stimulus such as the second part of the Help to Buy scheme meant that first-time buyers were likely to continue to need help unless more homes were built.
"There seems to be a signal from government that it has abandoned the target of building 250,000 new homes – the consequence of that is that house prices will become more affordable and rents will continue to rise."
The housing minister, Mark Prisk said: "Shelter's report fails to take into account the 170,000 new affordable homes we'll have built by 2015, or the £3.3bn we're investing to provide a further 165,000 new homes in the three years to 2018 – leading to the fastest annual rate of affordable housebuilding for two decades.
"On top of this our Help to Buy scheme is offering a valuable alternative to the bank of mum and dad, by enabling people to buy newly built homes with just a fraction of the deposit they would normally require."Laura, a 30-year-old geography teacher from Shropshire, has borrowed £17,000 from her parents to top up her deposit on a property.
She said: "Without the help from my parents it would have taken a very long time to save enough to afford my own home.
"I studied hard to become a teacher and it's depressing to think that even though I work full time and save money each month, I still had to rely on my mum and dad to get on the housing ladder."