HALF (49%) of parents, who have or plan to contribute to their children’s first home, plan to raise money to help their children buy their first property through cash savings, new research shows.

Housing investment and equity loans provider Castle Trust’s analysis revealed that to keep pace with the Halifax House Price Index over the past 10 years, a higher rate tax payer would have had to receive 4.3% gross AER on their cash savings to just match the rise.

The return for a basic rate tax payer would have needed to be 3.2% Gross AER.

Analysis by Castle Trust reveals that the average return of the top five instant access savings accounts, with a minimum investment of £1,000 or less, is 1.6% Gross AER.

As well as using their cash savings, Castle Trust’s research also reveals that a third (32%) of the parents who have or plan to contribute to their children’s first home intend to raid their stock market-related investments, a quarter (26%) will use JISAs and Child Trust Funds and one in five (19%) intend to cut back on certain aspects of their lifestyles to help their children on to the property ladder.

On average, that contribution is likely to be £16,300 and three out of four (73%) do not expect to get the money back.

Sean Oldfield, chief executive, Castle Trust, said: “Relying on savings accounts to help children build up their first deposit may be an uphill struggle with rates at an all-time low and unlikely to rise in the near future.

“Residential property is one of the most stable asset classes and has historically delivered annual returns of about six per cent a year, which is comparable to equities but with much greater stability.”