How is an ageing population going to impact on how wealthy we are?

Our report ‘Demographic change and housing wealth’ explores the projected changes in the population over the next two decades. This is the third in a series of blogs highlighting some of the key findings, and posing questions we’d like your opinion on.

Gerald Koessl is a Research Officer, National Housing Federation

Gerald Koessl is a Research Officer, National Housing Federation

20 December 2018

In recent years, there has been an emerging debate about housing wealth in England and the growing gap between young people and older people. Rising house prices have meant that younger people have been priced out of the housing market. Meanwhile, older generations of homeowners have increased their share of the population’s asset wealth, benefitting from significant rises in house prices.

Average housing wealth among 16-34 year olds has declined by almost £10k between 2006 and 2016. During the same period, the average housing wealth of those aged 65 and above increased by £34k.

But this doesn’t tell the full story. Those who have benefitted most from increases in house prices are those who already had the highest levels of housing wealth. While the generational divide has widened, the gap has widened even more between those with the highest and lowest levels of housing wealth.

Housing wealth increased by an average of almost £70k for the top 20% between 2006 and 2016, far more than for any other group.

And although people aged 65 or above are overrepresented in the top 20% owners of housing wealth, making up 33%, as opposed to 29% in the total population, they are not the Iargest group.

What does this mean for generations to come?

These trends have two important implications. A recent report by the Resolution Foundation showed that a growing number of younger people are using their parents’ wealth to buy a home, and particularly for the deposit. This may work for some, but this is dependent on the financial situation of people’s parents, meaning those with wealthier families will have better access to the housing market.

For the British welfare system, this has another important knock-on effect. With one of the lowest state pensions in the Western World, many of Britain’s households are dependent on housing wealth and low housing costs after they retire. This is why many see home ownership as the only solution to maintain a decent standard of living after retirement. Younger, low income households are therefore hit doubly. Younger people are priced out of home ownership and into the private rented sector, therefore face high housing costs during their working lives which prevents them from saving for retirement.

Housing associations can play a vital role in addressing this growing problem. Affordable housing for younger and older generations is not only providing the stability and security to individuals for living independent lives but also helps people to think and plan for their future, including their retirement.

Join the conversation – how will this affect your organisation and region?

We’d like your opinion on how these changes will impact on your provision of housing services and your local area. How do you think it will affect your organisation?

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