Over 65s hold £2.6TRILLION worth of housing wealth, Savills say

People over 65 have a record £2.6 trillion in net home wealth, new research suggests.

About £2.2 trillion is held as home equity by owner-occupiers over the age of 65, many of whom are mortgage-free, Savills’ findings show.

Many of these over-65s would have faced significantly higher interest and mortgage rates when buying a home than they do now – for example, the base rate was over 14 percent in October 1989.

Landlords aged 65 or over also have around £405 billion in net home assets across Britain, the report said.

More broadly, the over-50s currently own 78 percent of all UK private homeowners, according to the survey.

Conversely, in the under 35 age group there is only about £500bn of net home wealth, and a large portion of that is taken up by mortgage debt.

Lucian Cook, head of residential research at Savills, said: ‘The resulting generation gap in home equity is at the heart of much of the tension surrounding housing, and how these older homeowners choose to deploy their wealth has the potential to shape the market . for the next generation.’

The research suggests that the wealth of people aged 65 and over has more than doubled over the past decade, to more than £1 trillion in that period.

An estimated £475 billion of home ownership is owned by owner-occupiers over the age of 65 and is located in the South East.

This is £8 billion more than the combined total for this age group in Scotland, the North East, the North West and Yorkshire and the Humber.

It is the South East that has seen the largest spike in home ownership by the over-65s in the past 10 years.

To flesh out the numbers, Savills appraised stock in relation to the composition of property types and tenures at the council level, using a combination of data sources including the 2021 Census, English Housing Survey and Land Registry, as well as the Office of National Statistics and National price indices.

About half of owner-occupier home ownership in the Southwest is owned by people age 65 or older.

Savills said the region “remains popular with downsizing and retirees for a host of lifestyle reasons.”

When it comes to the age group most likely to be landlords, those aged between 50 and 64 come out at the top of the pack in the UK, Savills said.

People in this age range have about £679bn of home equity in the private rental market, it added.

Mr Cook added: ‘While the decline in mortgaged home ownership among younger households has eased over the past five years, older households have benefited most of the growth in home wealth over the past decade.

‘That’s mainly because those who benefited from the boom in home ownership in the second half of the twentieth century have reached the point where they have paid off their mortgage debt.

“But it also reflects the wealth they have built up in residential investments, which they have seen as an important part of their retirement provision.”

He added: ‘The resulting generation gap in home equity is at the heart of much of the tension around housing, and how these older homeowners choose to deploy their wealth has the potential to shape the market for the next generation.

“Different views on the supply of new homes, property taxes and investment for rental are all heavily influenced by the divide between the haves and have-nots.

‘Looking to the future, we expect that the majority of housing policy will continue to focus on the needs of younger households due to higher mortgage costs and rising rents.

“But offering more senior housing and other incentives to make downsizing more attractive are also fundamental.

Such measures would help unlock much-needed family homes and equity that could be used to help younger generations move up the ladder and trade the housing ladder, especially given the critical role the Bank of Mum and Dad is increasingly playing in the access to the UK housing market for the first time.

‘In the private rental sector it is a delicate balance. Now that a number of private landlords are approaching or approaching retirement age, too little policy pressure threatens to create further bottlenecks in the availability of private rental stock.’

What is happening in the housing market?

Last month, data from the ONS showed that average house prices in the UK rose by 5.5 per cent in the 12 months to February, up from 6.5 per cent in January.

The median house price in the UK was £288,000 in February, which is £16,000 higher than 12 months ago, but £5,000 lower than the recent peak in November 2022.

Average house prices rose 6 per cent over the period to £308,000 in England, £215,000 in Wales, £180,000 in Scotland and £175,000 in Northern Ireland.

In Northern Ireland, average prices rose by more than 10 percent.

Mortgage rates: The Bank of England raised rates to 4.25% in April

According to the ONS, annual house price inflation in Scotland is generally slowing since its recent peak of 13.8 per cent in the year to April 2022, to 1 per cent in the 12 months to February 2023.

The West Midlands saw the highest annual percentage change of any region of England in the year to February 2023, while London saw the lowest at 2.9 per cent.

Average house prices in London remained the most expensive of any region in the UK, averaging £532,000 in February, the ONS said.

At the other end of the spectrum, the North East still had the lowest average house price of any English region, at £160,000 in February.

In March, the Bank of England raised interest rates for the eleventh consecutive time after a surprising jump in the pace of rising prices.

The bank rate was raised from 4 percent to 4.25 percent after a meeting of the Monetary Policy Committee.

Subsequently, mortgage rates rose in April for both the two-year and five-year fixed rates.

However, mortgage availability jumped 774 products in April to 5,146, the second largest monthly increase ever, data this month showed.

It was the first time the number had risen above 5,000 since May 2022 and it is the highest since February 2022 when it reached 5,356.

The only bigger monthly increase was October to November last year when 869 new products were launched, Moneyfacts data showed.

There are now more than double the number of home loans on the market than in October 2022 at the height of the mortgage crisis when rates rose sharply in the mini budget.