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, according new research from Castle Trust.

However, its analysis reveals 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 this 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.

In contrast to this, Castle Trust’s two investment products, the Growth and Income Housas, which are suitable for ISAs and Junior ISAs provide returns linked to and in excess of the Halifax House Price Index. They can be taken out for terms of three, five or ten years.

The Growth Housa outperforms the Halifax House Price Index by between 25% and 70%, whether the index rises or falls, boosting any gains or reducing potential losses. Someone who invested in the Growth Housa when it was launched on 1st October 2012 for a ten year term, would have seen their money grow by 10.3% today.

The value of the Income Housa tracks any rise or fall in the Halifax House Price Index and it also pays an annual income of between 2% and 3%, depending on the chosen term.

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

On average this contribution is likely to be £16,300, and 73% don’t expect to get the money back.

Sean Oldfield, Chief Executive Officer, 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 6 per cent a year – which is comparable to equities, but with much greater stability. We offer investors an accessible way to invest in housing, without the hassle and significant cost involved with buy-to-let, with no management fees and guaranteed returns in excess of the national housing index.”