The UK’s housing market is increasing driven by older, affluent individuals already firmly entrenched in home ownership, in the latest sign that younger generations are being squeezed out.
The cost-of-living crisis, skyrocketing interest rates and stubbornly high house prices have made it increasingly hard for younger generations to move up the housing ladder, research from data science firm Outra reveals.
The average age of those tipped to move home in the next six months has surged 3.5 years in just 12 months amid signs younger households are being paralysed in their efforts to move home. That leaves the median age at 52.5 years-old, from 49 years-old last year.
The data indicates that every age band below the age of 45 is set to find it more difficult to move. The market is expected to be driven by older households, in particular those that already have significant equity in their homes over the age of 55.
Outra founder Giles Mackay said: “The UK’s housing market is now the preserve of the old and rich, and while a boom now will be welcome news to those involved in the day-to-day transactions given fears of a slowdown, there’s a real danger that what this trend indicates is the start of an inheritocracy.
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“Retiring boomers may be looking to move to a house in the country, seek a new life abroad or downsize and pass on that wealth to their millennial children who otherwise would not be able to get onto the ladder.”
Separate research by Savills shows that more than half of downsizers – 51% – have owned their homes for over 20 years, and three quarters – 75% – for more than 10 years.
Savills research into attitudes to moving reveals that older sellers, typically downsizers and empty nesters are amongst the most committed buyers in the market, with a net balance of +52% planning to move in the next one to two years. But, emotions play a significant role in the decision to move.
Savills survey of almost 2,000 buyers and sellers probed feelings about moving home. When asked what was the driving motivation behind moving, lifestyle factors are revealed to be the most important to downsizers and empty nesters. Almost half (48%) hope to ‘right size’, looking to live in a more manageable sized property, while a quarter (24%) are seeking a lifestyle change .
Releasing equity to fund retirement, or to help family members was a top priority for 18% of downsizers and empty nesters surveyed. This comes as 164,000 first-time buyers are expected to receive family assistance in getting their mortgage in 2023, according to latest estimates from Savills research.
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According to the Savills survey findings, owner-occupiers aged 65-plus hold a record estimated £2.587trn of net housing wealth in homes worth a total of £2.735trn. The vast majority of which is held by mortgage-free homeowners (£2.038trn). This has risen by £1.111trn over the past 10 years.
Frances McDonald, director of research at Savills, commented: “Those looking to downsize or move on from long-term family homes are in a strong position in today’s market, many having benefitted from the strong house price growth of the past 20 years.
“Many in this cohort are likely to become cash buyers when they sell their family home, and are therefore less exposed to the concerns around rising interest rates. This means they place a greater significance on the emotions of moving, as opposed to the financials.”
By Marc Da Silva
Source: Property Industry Eye