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New data reveals a significant disparity in housing wealth across generations in Britain, with individuals over 60 holding more than nine times the amount possessed by those under 35. This divide raises concerns about generational wealth and property ownership.
Boomers Dominate Housing Wealth in Britain
According to a recent study by Savills, owner-occupiers aged 60 and above now possess an estimated £2.89 trillion in owner-occupier housing wealth throughout the nation. This substantial sum represents 56% of the total housing wealth, with those over 75 controlling nearly a quarter of it.
In contrast, individuals under 35 collectively hold a mere 6% of the owner-occupied housing wealth in Britain.
Factors Contributing to the Wealth Gap
Several factors contribute to this significant disparity in property wealth:
- Longer Financial Lifetimes: Older individuals have generally had more time to accumulate wealth and are more likely to own homes.
- House Price Appreciation: They have benefited from substantial increases in house prices over the past four decades. According to Nationwide’s index, house prices have surged by 2,600% during this period.
- Mortgage-Free Status: The majority of those over 60 have fully paid off their mortgages.
Younger homeowners, on the other hand, are typically earlier in their homeownership journey and are more likely to have mortgages that constitute a significant portion of their property’s value.
Debt Considerations
While those over 60 have a substantial amount of housing wealth, they still hold £60 billion in outstanding mortgage debt, which accounts for only 2% of their homes’ total value.
Conversely, those under 35 own property worth a total of £600 billion but have £300 billion in outstanding mortgage debt. This means that those in this age group who own homes have approximately 50% equity.
Expert Insights
Lucian Cook, head of residential research at Savills, noted, “Over the past 10 years, debt has become a less important component of the growth in the value of the nation’s housing stock, with increasingly more equity concentrated among older homeowners and investors.”
He added, “The baby boomers have continued to build wealth, having paid off their mortgage debt, and Generation X has been working hard to achieve the same goal. Meanwhile, Generations Y and Z have had much less opportunity to work their way up the housing ladder profitably.”
Downsizing Reluctance Affecting Market
One factor impeding the transfer of housing wealth to younger generations is the hesitation of older homeowners to downsize. Baby Boomers constitute 44% of homeowners, but accounted for only 18.5% of homebuyers last year, meaning only one in 57 moved house.
“Despite many older homeowners holding on to properties that are now too big for their needs, there is little incentive for them to move during their lifetime,” Cook stated.
He suggests that “The provision of more retirement housing, along with other incentives to make downsizing more appealing are also fundamentally important. Such measures would help unlock much-needed family housing and equity that can be used to help younger generations get on and trade up the housing ladder.”
Regional Variations in Homeownership
The proportion of Baby Boomer homeowners varies across the country. The South West and Wales have the highest proportion, where almost half of homeowners are Baby Boomers. These regions are popular among retirees and downsizers due to lifestyle factors.
In contrast, London has the lowest proportion of homeowners over 60, at 38%.
However, the South East holds the highest value of owner-occupier wealth, with over 60s possessing £603 billion in housing wealth, or 21% of the total net housing wealth held by this age group. This figure surpasses London by £203 billion and Wales and the South West combined by £171 billion.