- Boomers had it twice as easy to buy a home earlier in their lives, data shows
- Home ownership has shifted to older generations over the past 20 years
Stop eating avocado on toast, ditch Netflix and work harder.
That’s witty advice that’s usually parroted as a solution to Gen Z’s home ownership woes.
But according to one expert, stagnant wages and soaring house prices have only encouraged “zoomers” to buy more avo-on-toast and avoid the housing ladder altogether.
Renowned historian Dr. Eliza Filby, who specializes in generational evolution, argues that economic restructuring in the wake of the 2008 financial crisis benefited Boomers, who typically owned homes before the global crash.
Almost two decades of rock-bottom interest rates meant “wealth paid off” while wages were “suppressed”, she told MailOnline.
As such, Dr Filby said being older is now “associated with wealth”, unlike previous generations when pensioners were typically seen as poor.
It also means that younger generations are “more loyal to their parents than to their employers” because they are more likely to acquire wealth through inheritance than wages.
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Dr Filby, a writer and speaker who has taught at King’s College London and in China, said: “The younger generation are trying to build wealth and live off their wages.
“But these opportunities are increasingly out of their reach.
“Although wages have increased, especially recently, they are not buying anything like our parents, such as selling council houses to get these assets.”
Margaret Thatcher introduced Right to Buy in 1980, which gave council tenants the chance to buy their homes for at least 35 per cent below the market price.
Councils have not been allowed to spend the proceeds on building new social homes, which has significantly reduced the supply of social rented properties available over the past four and a half decades.
While David Cameron’s government introduced Help to Buy ISAs (later replaced by similar Lifetime ISAs), which give first-time buyers a bonus on their deposit, the level of the discount is much less generous.
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Dr Filby, who is an older millennial at 43, said the difficulties her generation faced in getting on the housing ladder had “encouraged us to almost buy more avocado on toast than to acquire property”.
‘Millennials and Gen Z are driven by experiences rather than assets because assets are so far out of reach.’
Analysis by MailOnline suggests that a 35-year-old baby boomer found it twice as easy to buy a home in 1999 than a millennial of the same age last year.
The median house price in 1999 – when the youngest boomers were 35 – was £70,000, according to the Office for National Statistics.
Average earnings in their age group were £16,700. That equates to a property price-to-earnings ratio — essentially a measure of affordability — of 4.2 to 1.
But average property values have quadrupled since the late 1990s, rising to £285,000 last year. A 35-year-old millennial earning an average full-time annual salary of £32,500 had a house price to earnings ratio of 8.83 to 1.
And things seem to be getting worse for Gen Z.
A 25-year-old Zoomer in 2022, one of the older members of the generation, earned an average of £25,200 when house prices were £275,000 – a ratio of 10.94 to 1.
A 25-year-old millennial in 2013 would see a slightly more favorable ratio of 9.86, and a Gen Xer of the same age in 2000 would find it significantly easier to purchase an average home at a ratio of 5.35 to 1.
An analysis of census data shows that homeownership among young people has fallen sharply since the beginning of the 2000s.
More than 2.2 million (52%) 16 to 34-year-olds owned their own home in 2001. But according to the latest census in 2021, this has fallen to 1.4 million (35%).
There are now 1.8 million people aged 16 to 34 in the private or non-rented sector (such as those living with relatives), up from 1.1 million in 2001.
Home ownership is a significant luxury for older generations. In 2001, 2.15 million people aged 55 to retirement age (65 for men, 60 for women) owned their homes, and 2.65 million retirees owned them.
Although a direct comparison is not possible, as the ONS changes the way age groups are recorded between censuses, the figures show that older people are increasingly owning homes.
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The 2011 census shows that more than 4.6 million people between the ages of 50 and 64 owned their homes, and 4.55 million people over the age of 65. By 2021, this has grown to more than 4.9 million people aged 50 to 64 and 5.5 million people over 65 who own their homes.
As a percentage of the group, homeownership decreased for all age groups except those over 65.
In 2001, 20 percent of homeowners were retirees, compared to 17 percent who were between 16 and 34 years old.
But now only nine percent of homeowners are in the younger age group of 16 to 34, which includes millennials and Generation Z. The 2021 Census shows that 36 percent of homeowners are 65 and older.
Dr Filby can’t see a way for more younger people to own their home “unless we build a lot more houses and the inheritance goes down”. She said: “When you have a lot of home ownership in one generation without a mortgage, inheritance becomes a key way to get on the housing ladder.
“The very rich pass on their wealth alive, [whereas the] most pass after death.
“But when your parents give you a down payment, it’s a luxury to give it while they’re still alive.
“Most people have their wealth in property that they live in until they die and are subject to inheritance tax. And the average millennial will inherit in their 60s.”
Steady wages and lucrative gains from assets like home ownership in recent decades have led, according to Dr. Filby to growing inequality between generations.
She said: “When you talk about wages and assets, the story is that assets have gone up but wages haven’t.
“Boomers have been in the wage economy and have acquired property themselves, but wages are not being paid like they used to be.”
Meanwhile, ONS figures show average wages have actually fallen over the past 20 years after adjusting for inflation. Median wages across all age groups – including part-time and full-time workers – were £30,250 in 2003, but have fallen to £29,700 since last year.
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Dr. Filby said “wages used to be paid and now they don’t”, adding: “We never associated old age with being rich, they were often poor.
“But now being older is associated with wealth.
Dr Filby thinks most boomers “know they’ve been lucky enough to have a home and a family” and therefore often help their children financially.
He says the real inequity will be intra-generational among millennials and Gen Z themselves, depending on how much they can rely on the “bank of mum and dad” to get on the housing ladder, pay the rent or even just cope with rising costs. living.
“How many millennials have bought a house without mom and dad’s help,” she asked. “I know one who was able to do this just because he had a share scheme in the company he worked for, which helped him build up a deposit.”
This reliance on the Bank of Mum and Dad may mean younger generations “are more loyal to their parents than their employers”, he says.
And Gen Z is even less able to rely on input from their parents, who are more likely to be Gen X—and less well off—than Boomers. Dr Filby said: “When we look at Gen Z, they often receive support from their grandparents through inheritance, university fees or rent.”
Dr Filby said that “boomers have normalized home ownership as a generation”, however our success is about education.
But student debt has soared since tuition fees were first introduced under Tony Blair’s Labor government in 1998 at £1,000 a year, and have since risen to £9,250 under the Tories.
The average student loan debt when graduates first start repaying has risen from around £5,000 at the start of the 2000s to around £45,000 last year, according to figures from the Student Loan Company.
A post-2012 graduate with a master’s degree and student loan repayment – with a median full-time salary of £34,963 – will pay £1,512 in installments a year: £684 for undergraduate and £828 for postgraduate.
Older generations have also benefited from government regulations in the last ten years or so.
In 2010, the then Tory chancellor George Osborne introduced a triple lock on the state pension, meaning it increased by average earnings, inflation or 2.5 per cent, whichever was higher.
And if the Tories win the general election, they plan to introduce a “triple plus lock” to guarantee pensioners’ personal contributions will always be higher than the new state pension level.
A Financial Conduct Authority report from earlier this year showed only one in 10 over 75s feel they can’t cope financially.
That was compared to 35 percent of 19 to 34-year-olds and 39 percent of 35 to 44-year-olds who said the same.
- Dr Eliza Filby’s forthcoming book, Inheritocracy: It’s Time to Talk about the Bank of Mum and Dad, is published in September by Biteback.