The over 55s are at the top of the property ladder; but are we approaching the end of an era?
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It would appear that those of a certain age have founded a generation of property tycoons. Perhaps even the last generation.
The news is constantly reporting on the merry-go-round that is home owning. The younger generation are having it hammered into them that they’ll either never own a home or that certainly they might struggle to. Sometimes it seems like things are on the up; sometimes we see a slump. It can be a confusing time for anyone trying to buy. But the resounding message is this: getting onto the property ladder isn’t a young man’s game.
It appears that those at the junction of mid-life are potentially the final members of a fading generation of homeowners with options, as Prudential reveal that two in five of property owners over 55 will probably purchase one or more home in the coming years.
In a time when those in their 20s and 30s are finding it difficult to own just one property, are these findings a slap in the face?
The study reports that 18 percent of those planning an additional property deal as they near retirement won’t even live in the home they buy. On average, the maximum price for their next property purchase is over £250,000 with one in five willing to spend £350,000 or more.
The figures suggest that future dealings in the property market by householders currently over the age of 55 will account for more than three million property transactions, worth a total of more than £775 billion.
While this generation are able to splash the cash, their children are struggling in the meantime. Does this notion of a last generation of affluent property deals spell out doom and gloom for aspiring younger house hunters?
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Rod Fullbrook, Sales Manager at Collinson Hall St Albans, has a bright outlook. Speaking to the Herts Advertiser, he pointed out that the middle-aged are actually helping out their children by investing now. “Spend the money on a car and it’ll depreciate. Put it into a house and the money very much stays alive,” he says. “This is what’s so attractive about property investments. Your money needs to go somewhere. Pensions die - property doesn’t. Those investing in property now - keeping their homes or buying new ones - are doing the right thing.”
The attitude of industry professionals is certainly more positive than the concerns the general public might have. Particularly in the South East, where parents and grandparents are actually doing their kids a favour.
“Obviously there’s the notion of the bank of mum and dad,” Mr Fullbrook continued. “The best way to deal with their money is to use it to give the next generation a leg-up to the market. Money will filter down, and so much of wealth in the South East comes from property.”
This circle of life attitude certainly is encouraging for the younger set. But what about now? Many are still struggling to get on the property ladder and it would seem that their sturdiest competition is their parents.
Elaborating on this, Mr Fullbrook said: “since interest rates went rock bottom, investing in bricks and mortar generates a better return. The first time buyer offers a 10 percent deposit, while the middle aged can offer cash.”
Clearly a seller would respond more enthusiastically to those happy to pay up front which, again, bodes less well for the youngster with their scraped together deposit, low-rate mortgages and expense-busting salary. So perhaps the answer is not to pit yourself against mid-life bank balances and instead wait for a quarter of a million to land in your lap later on. If this is true, this isn’t a tale of a dwindling generation. The average youngster will get there eventually, and probably become real-estate moguls themselves. But there’s some waiting to be done first, while their elders get their portfolios in order.
This is more the story of a waiting generation, rather than a lost one.