Demographic timebomb and housing

[Salisburyspire]

When do we think babyboomers will begin to sell? This is not a generational bashing thread by the way, am asking from a strategic point of view.

Any economists or demographers out there? I have only seen one UK article on this and it predicted they wouldn’t sell until 2034 onwards. Surely that’s too late? Is there a particular five year period during which we expect there to be a huge downsizing?

When they do sell up, will it leave a glut of large homes on the market? I’m Gen X but very much want to trade up (one last large house). We own our house outright but the next step up in the area near DC schools has exponentially shot up over the last three years. (Leafy London but not too far out). One issue is a massive shortage of decent housing stock in that area. Our plan was always to move there, see the DC through school and then downsize as there doesn’t seem any point to living in a big house without the kids there when we could by then be enjoying a more comfortable retirement and liberating some property cash while not worrying as much about inheritance tax or costs of maintaining a large house and garden.

It seems though that the generation before is not budging. There are widowed people living in enormous five bedrooms homes with huge gardens. They don’t all look to be super wealthy judging by some of the slightly overgrown gardens etc. Yes it’s a wealthy area and yes it’s their right to live wherever they want. However unless all these homes are in a family trust or already signed over, the inheritance tax bill will be enormous.
These are homes in the £2million plus bracket.

If we are lucky enough to buy one of these homes (and stretch ourselves massively) do the demographics work against us if we have to sell in 10-15 years? Won’t that coincide with a glut of large houses so we will have bought at the top of the market and possibly be selling in a downturn?

Will Generation X actually be the riskiest generation to lend to as they don’t have enough working years ahead of them to properly pay down massive mortgages whilst some (not all!!) millennials will inherit property wealth from babyboomer parents?

Should the government reform stamp duty to provide an incentive to downsize? (Yes I know there are not enough quality smaller homes for people used to huge ones in nice areas). Will there ever be a great downsizing shift or is our country not built for it?

They are not all worth 2 million or so by any means, it really depends on which part of the country you are in. You can buy a 4 bed round here for 450k or less.
@Totalwasteofpaper so what if they leave the houses to 'wrack and ruin'? You seem to want people to move out and away simply so people with children can move in. Entitled or what?
Just because ones getting on does not necessarily mean wanting to downsize. We would like a house a similar size to what we have (4 beds, 3 recep) just in a slightly more convenient position (we are very rural). This seems to be the most popular size. Until the market improves with more choice (if it ever does) we shall be staying put, and if we never move, well, it's not the end of the world.
I can never get this idea that just because you are retired you would be happy to get rid of 50% of your posessions simply so you can fit in some boxy house with tiny rooms,. Sod that - I had all that in my 20s and 30s and don't want to go back to it.

Yes to all Brownlongearedbat points

I'd be interested to know what these posters think of as necessary work on a house as well.

Obviously my family doesn't have a house the size described here

But if it's possible, when the time comes, I'd like to live in it.

I'm just one person.

If I'm thinking that, there will be a lot of families inheriting large houses who want to do the same.

@Brownlongearedbat

They are not all worth 2 million or so by any means, it really depends on which part of the country you are in. You can buy a 4 bed round here for 450k or less. *@Totalwasteofpaper* so what if they leave the houses to 'wrack and ruin'? You seem to want people to move out and away simply so people with children can move in. Entitled or what? Just because ones getting on does not necessarily mean wanting to downsize. We would like a house a similar size to what we have (4 beds, 3 recep) just in a slightly more convenient position (we are very rural). This seems to be the most popular size. Until the market improves with more choice (if it ever does) we shall be staying put, and if we never move, well, it's not the end of the world. I can never get this idea that just because you are retired you would be happy to get rid of 50% of your posessions simply so you can fit in some boxy house with tiny rooms,. Sod that - I had all that in my 20s and 30s and don't want to go back to it.

Well said. The bitter ageism on this thread really is laid bare to see.

Can you really blame people for feeling bitter though? When even as two working professionals property ownership is a distant dream for many young people because prices have inflated to ridiculous levels, which has been encouraged and allowed to happen much to the benefit of the baby boomer generation. Instead of crying “ageism” and “but life was so hard without iPhones” consider why many young people
are resentful.

Until the process of moving is simplified and made less expensive, people will be put off. Moving is very expensive, stressful and time consuming with the risks of losing money on aborted property chains (based on the english system; I know it differs elsewhere).

We downsized at the end of last year due my partners disability (we are in our mid 60's). It cost £14.5k and we moved just over 200 miles due to lack of suitable properties where we were. So called retirement flats are mostly shoe boxes jammed onto a very small site that come with restrictive covenants and extortionate service charges. A lift in a block of flats again means large service charges and no guarentee that the MA will maintain it properly.

I think it was another forum where a would be mover was complaining that the retirement property she was offered was just 40m2, which is tiny.
It isn't just owner/occupiers; the same bottle neck exists in social housing with single occupiers in 3/4 bed homes but no stock of smaller premises for them to move into.
There needs to be an assessment of what housing is needed to provide a balanced supply, rather than just squeezing as many properties onto a site as possible People will stay put if there isn't a suitable alternative.

I don’t understand why inheritance tax is a reason to downsize. Cash in property and invest elsewhere, you still have to pay inheritance tax!

I downsized when the children left home and will do so again when they are more established we can flip from me hosting to me visiting them. Although as a potential MIL MN has warned me that might be frowned upon.

Not read the whole thread yet op.

I've read about this theory but I'm not sure. I think the issue is going to be the ageing population & how the gov deals with revenue.

So the burden on income tax is very high & will get worse as the tax band freezes haven't hit yet. I think the gov will look at CGT & IHT & I wouldn't be surprised if care in the home is means tested to include house prices.

Perhaps your right that it will be felt more by Gen X as anecdotally obvs I know lots of people in London who are paying ££££ for their home but plan to downsize to pay off mortgage &/or fund retirement

Of course if the cost of living keeps increasing or doesn't reduce (will it?) then people who are asset rich but cash poor may have to sell.

Personally I don't get the annoyance at the stamp duty cost when older people are downsizing. Most will have made extraordinary gains.

@Elsiebear90

Can you really blame people for feeling bitter though? When even as two working professionals property ownership is a distant dream for many young people because prices have inflated to ridiculous levels, which has been encouraged and allowed to happen much to the benefit of the baby boomer generation. Instead of crying “ageism” and “but life was so hard without iPhones” consider why many young people are resentful.

But if you live in your home, do you benefit from the increased value?

You mention "young people". Like most people, my parents were in flatshares or bedsits for a chunk of their youth.

I have certainly never heard anyone saying "life was so hard before iphones"!!

A lot of what you see on the "need to save money" threads popping up is standard stuff that many people never spent money on anyway.

Property prices are insane. Not convinced the elderly are at fault!

I do think a lot of older people wait too long to move though, which is a point

I agree with this you need to move before you're ready if that makes sense otherwise it's too late.

@EmmaH2022 of course you benefit from buying a house for peanuts that’s now worth millions, because there’s no way you could ever afford to live in the same house if you tried to purchase it at its current value. If you’re like my parents you’ve paid off your tiny mortgage very early and your house has increased in value ten fold in the past twenty years, how is that not a benefit to them?

Most people buying these days could only dream of such a scenario, without gifted deposits many have 35 year mortgages, had to live with their parents until they were 30 to save a deposit, put off starting a family, or can’t afford to have a family and they’re the lucky ones who could get into the property ladder, many will be renting for the rest of their lives.

Saying that things were equally hard for the boomer generation is factually incorrect.

I'm not a boomer but I do have a five bed house. Theres no way on earth we could afford a five bed ever. So we bought a three bed with side gardens and built one. It cost 75k to build a a double hight extension to give two double bedrooms and a bathroom upstairs. It wasnt easy but it was doable. The real way to jump properties is do the above but multiple times. From this I could now buy a four bed detached and extend that. If I did that I'm pretty sure I could move onto pretty much any house.

Or maybe people don't mind paying tax on money they didn't actually earn?

Not all of us live our lives trying to avoid tax.

I like my house. I have no intention of downsizing because some sharp elbowed couple are cross that I live in the catchment of the best primary school. I shall stay here and just live downstairs if I can't manage the stairs.

Also I might rent out rooms if I need the income. I don't want to live in a dingy retirement flat thanks.

I think that people forget that mortgages were severely rationed until the 70s. You had to wait a long time to get one, there were queues outside building societies when they were released.

No 35 year mortgages, no gifted deposits, no credit cards to buy furniture.

I am thinking about this general question a lot right now because we are mid-Boomers, nearly retired, and want to move to a new area that doesn't involve a minimum three-hour drive to visit any of our friends.

However, we shall have to leave our wonderfully designed, well-built house and magnificent view behind. Hours on Right Move are not showing me the sort of house we'd want for the next 15-20 years, even with a pretty healthy budget. I'd consider a self-build project with contractors, but DH isn't keen and finding a decent plot isn't easy.

Like most people our age, we want spacious rooms, a decent social-entertaining kitchen-dining-living space, plus two or three ensuite bedrooms and enough garden to give us a degree of privacy. One child, at university, will get a handsome deposit on a first property in due course.

We shall probably end up buying a house from a probate sale and modernising it to our requirements, if we can pip all the other folk to the post.

@Brownlongearedbat

They are not all worth 2 million or so by any means, it really depends on which part of the country you are in. You can buy a 4 bed round here for 450k or less. *@Totalwasteofpaper* so what if they leave the houses to 'wrack and ruin'? You seem to want people to move out and away simply so people with children can move in. Entitled or what? Just because ones getting on does not necessarily mean wanting to downsize. We would like a house a similar size to what we have (4 beds, 3 recep) just in a slightly more convenient position (we are very rural). This seems to be the most popular size. Until the market improves with more choice (if it ever does) we shall be staying put, and if we never move, well, it's not the end of the world. I can never get this idea that just because you are retired you would be happy to get rid of 50% of your posessions simply so you can fit in some boxy house with tiny rooms,. Sod that - I had all that in my 20s and 30s and don't want to go back to it.

I don't think it's entitled.I think its just a shame and wasteful of their part. Period properties need basic maintenance or the features get destroyed. I wouldn't care much who lived there if the properties were properly maintained. One couple across from us keep theirs beautifully but they are the exception.

Letting the original wood frames than are 100+ years old rot because they can't / won't get them repainted... leaving gutter unmaintaned so there is ingressed water and damp damage.
Letting the original porches rot to the point of collapse...

Elsie there's that but then that's a bit like me raging that I'm short and being angry at tall people

There's no reason why older people should move out of "family homes" to benefit others. Where does it end? We start saying "you can't have a big house because... (insert reason here)".

I often look at my parents house and wonder what the hell happened to prices. But I'd never be saying that particular groups of people should move house to suit me.

House prices can only go up so much beFore they become completely unaffordable.

Yes, my part of London hasn't changed much since Brexit although prices were already high. If you look at the craziness of the last few years London hasn't seen much growth compared to other regions. I think a lot was driven by second steppers stuck on the ladder so to speak. I also read that more FTBs then even left London to buy which will have an impact at some point.

Elsie also, the house didn't cost peanuts to them at the time

It was whatever the mortgage they could get and about 16% interest.

Agree with the point that the homes we are building aren't right. My mum wants to downsize, she wants a 2/3 bed with off street parking, which is a struggle.

@ChiswickFlo

I've seen articles stating that most "boomers" will be dead/in care by 2035

Hardly. If the definition given upthread that babyboomers are the group born between 1945 and 1964 is right, the youngest ones will be 71 in 2035. My husband is currently 66, super fit and active, and unless he has some catastrophic health event or accident in the next five years, he won't be in care at 71. My parents are in their late 80s and aren't in care and are still living at home with no carers coming in, not even a cleaner.

@Elsiebear90

@EmmaH2022 of course you benefit from buying a house for peanuts that’s now worth millions, because there’s no way you could ever afford to live in the same house if you tried to purchase it at its current value. If you’re like my parents you’ve paid off your tiny mortgage very early and your house has increased in value ten fold in the past twenty years, how is that not a benefit to them?

It's not a benefit because you can't spend a house! Until you realise the equity by selling, it's not liquid cash so it makes zero difference what it's "worth".

Our house was our third property, and cost about £130k at the depths of the early 90s recession. And, no we couldn't afford it now, with 25 years of property inflation and relatively slow income growth, but when we downsize we shall pay forward to our child, who will also inherit... and we haven't inherited a dime. DMIL is spending her equity on nursing home costs fast (at £4k per month) and DM's home is very modest indeed.

@Clymene

Or maybe people don't mind paying tax on money they didn't actually earn?

Not all of us live our lives trying to avoid tax.

I like my house. I have no intention of downsizing because some sharp elbowed couple are cross that I live in the catchment of the best primary school. I shall stay here and just live downstairs if I can't manage the stairs.

Also I might rent out rooms if I need the income. I don't want to live in a dingy retirement flat thanks.

Hear, hear!

The only reason to downsize really is if you cant manage the bigger house or need access to some cash to give you a better standard or living - whether thats holidays or a cleaner and a gardener. People can do a bit of inheritance tax planning too if they feel confident living another 7 years.otherwise its a lot of stress and expense with no gain.