Guardian News and Media/London
Baby-boomers, already accused of enjoying free university education and final salary pensions denied to younger generations, are now in the dock for snapping up smaller homes that would traditionally go to first-time buyers and young families.
“Downsizing among this demographic by purchasing smaller homes using equity built up over years of booming property prices is a growing trend,” says Mark Harris, chief executive of mortgage broker SPF Private Clients.
“And often, money is no object: they can buy with plenty of surplus left over for supplementing their pension.”
Research from estate agency Savills shows that owner-occupiers aged 55 and over account for 56% of the UK’s total equity. If they choose to downsize, this group are popular with sellers and estate agents alike as they are often cash buyers or only need small mortgages.
Meanwhile, sky-high house prices are freezing younger generations off the property ladder, with home ownership dropping to its lowest level since the 1980s, the government’s English housing survey revealed last week, with one in three owner-occupiers aged over 65.
According to the latest data from estate agency Strutt Parker, around 40% of those moving home in the six months to April 2013 were “at or near” retirement, and using the equity they have accumulated to buy a smaller property outright.
“It’s easy to see why first-time buyers might be aggrieved by this news as they are competing with rising numbers of cash-rich buyers who aren’t struggling on tight budgets,” says Harris.
This trend is most significant outside London. In Scotland, more than a quarter, at 28%, of all property sales during this period were made by downsizers. In the Midlands it was 25%, while in the south of England it was 21%.
Savills has reported that 50% of buyers on its books in Harrogate are downsizers, while in Bath and Lincoln they account for around 40%.
There is no formal definition of “downsizers” but they generally fall into one of three categories; those aged between 50 and 60 whose children have left home ; those between 50 and 60 who want to cash in on their home’s equity to fund their retirement, and those over 70 looking to move to specialist retirement accommodation or smaller homes, usually bungalows.
Meanwhile, the Joseph Rowntree Foundation, a social policy charity, says the number of 18- to 30-year-olds who own their own homes will drop from 2.4mn now to 1.3mn by 2020 while the number living with their parents will rise by 500,000 to 3.7mn.
“Young people are increasingly and systematically financing richer, older people. Urgent action must be taken as the baby boom cohort starts to retire,” says Angus Hanton of the Intergenerational Foundation, a think-tank promoting equality between age groups.