An intriguing article in the FT the other day (paywall). Over-65s, i.e. the boomer generation, account for almost half of UK housing wealth.
The generation of people born before the mid 1950s own £1.7tn of residential property by value, or 46 per cent of all housing equity held by owner-occupiers, according to an analysis of official data by Savills, the estate agents. 1
Lawrence Bowles is quoted saying that many boomers “had bought at a time when interest rates were far higher than today”. Correct, and see our post from September 2018, suggesting that the nominal mortgage cost of the average UK house from 1980 to the end of 2017 has remained almost unchanged. House prices have gone up a lot since the days of pinstripe suits and hairstyles that were a fire hazard, but interest rates have come down too.
One of the comments puts the intriguing question of what happens when the boomers die off.
No doubt there are many factors affecting this, but given how many articles there are on the trajectory of future house prices and the factors affecting them, the coming release of property due the boomers’ demise, appears to be getting too little attention. Any tips where to find insight into this?
As a rough start, and don’t take this too seriously, the chart below shows the release of the £1.7tn of housing wealth using standard mortality projections.
By 2050 they are all pretty much gone, to the relief of those who claim that boomers are the most evil generation that ever existed, with the peak rate of release occurring in the 2030s.
Exactly what that implies economically is anyone’s business.