Wealth from property ownership held dominantly by those aged 60 and above reaches an all-time high.
In the United Kingdom, there is a substantial disparity in property wealth across different age groups. According to a recent assessment by Savills, the over-60s collectively hold more than half (56%) of all housing wealth in the country, with the over-75s alone controlling nearly a quarter (23%).
This compares starkly with the under-35s, who hold just 6% of the housing wealth. Homes owned by those aged 60 and above are estimated to be worth a total of £2.95 trillion, according to Savills. Those who own their homes outright constitute the UK's largest tenure type by value, with their share of property value increasing over the past decade as more older homeowners have become mortgage-free.
Interestingly, Savills reports that the number of older people becoming mortgage-free in the past 10 years has grown at an "above-average" rate. However, older homeowners still carry around £60 billion of mortgage debt, which represents merely 2% of the total value of their homes.
On the other hand, the under-35s hold property worth £600 billion but owe around half of this (£300 billion) on their mortgages. Lucian Cook, head of residential research at Savills, attributes this trend to an increase in equity among older homeowners and investors over the past decade.
Cook notes that older homeowners, primarily Baby Boomers, have continued to build wealth, having paid off their mortgage debt, while Generation X has been working hard to achieve the same goal. In contrast, younger generations like Gen Y and Z have had fewer opportunities to profitably climb the housing ladder.
One reason for this disparity is that many older homeowners hold ontoproperties that are now too large for their needs, showing little inclination to move. While Baby Boomers make up 44% of homeowners, they only comprised 18.5% of homebuyers last year. This indicates that just one in 57 of them moved house.
Cook suggests that providing more retirement housing and offering incentives to make downsizing more appealing could help unlock much-needed family housing and equity that can be used by younger generations to get on and trade up the housing ladder.
Regionally, the highest concentration of Baby Boomers is not where the highest owner-occupier wealth is concentrated. Baby Boomers make up the highest proportion of homeowners in the South West and Wales (49%), both popular with downsizers and retirees for lifestyle reasons. Conversely, over-60s make up the lowest proportion of homeowners in London (38%).
However, owner-occupier wealth is highest by value in the South East. Over-60s hold £603 billion of housing wealth in this region, representing 21% of net housing wealth held by this age group. This is £203 billion more than in London and £171 billion more than across Wales and the South West combined.
- The wealth management and personal finance sectors should consider prioritizing services to assist the under-35s, who hold significantly less housing wealth compared to older age groups, especially since a large portion of their property value is tied to mortgage debt.
- As the over-60s control a substantial portion of the housing wealth in the United Kingdom, with many homeowners carrying little to no mortgage debt, there may be opportunities for wealth-management strategies to help them redeploy their property assets, such as through retirement housing or downsizing incentives, which could benefit younger generations struggling to climb the housing ladder.
