Latest news with #propertyprices
Telegraph
27 minutes ago
- Business
- Telegraph
‘We never had it easy': why boomers are far from the lucky generation
The idea that baby boomers got lucky with the housing market has become almost unquestionable. Sky-rocketing house prices have propelled the generation born between 1946 and 1964 to wealth and comfort in old age, thanks to no great skill of their own. Having surfed the crest of Britain's property wave, they are now sitting pretty on top of a housing ladder that, for those at the bottom, feels more like a greased fireman's pole. Boomers are accused of refusing to sell up their huge homes, preventing younger families from upsizing. But the reality is more complicated. While the average boomer has benefitted from rising house prices in the long run, the generation has also been battered by double-digit interest rates, bursting property bubbles and negative equity, with many still renting in old age. Boom and bust That's not to say that younger generations have nothing to be jealous about. Between 1975 and 2025, the average house price in Britain rose from £10,978 to £271,619, according to Nationwide – a 25-fold increase. It's the sort of rise you would expect from top-performing stocks. Buying shares in Microsoft in 1993 and selling at the height of the dotcom bubble six years later would have netted similar returns. Even when adjusted for inflation, house prices have more than tripled in the past 50 years. Crucially, the homes the boomers bought were also more affordable. The ratio of house prices to earnings in Britain is now over eight, compared to around four for most of the 1950s to 1990s. The result is that homeowners aged 60 and over hold more than half of the nation's owner-occupied housing wealth, totalling around £2.9tn, according to estate agent Savills. The wealth gap between the generations has grown since the financial crisis. A Resolution Foundation study found that between 2006-08 and 2018-20, median wealth among Britons in their 60s rose by 55pc in real terms, but median wealth for those in their 30s fell by 34pc. At the same time, the share of Britain's wealth held by the under-40s has fallen from 7.5pc in 2010 to 4pc today. 'We didn't have it easy' This sustained house price growth has been punctuated by several big slumps. The housing boom of the 1970s and 1980s was brought to an abrupt end by a recession, a steep hike in interest rates and a wave of repossessions, fuelled by a big rise in unemployment. House prices tumbled by 37pc between 1989 and 1995. The unprecedented upswing that followed ended with the subprime mortgage crisis of 2008 which wiped 26pc off the average house price over the next six years. Jane Anderson, 72, has experienced this roller coaster first-hand. She bought her first home – a modest, terraced new-build in Ayr, Scotland – in 1977 with her husband, Sandy, for £15,900. 'We only had a coal fire, and no double glazing,' she says. 'We were scraping ice off the windows.' At the time, Sandy earned £4,000 a year as a site engineer for the fast-food chain, Wimpy, while Jane worked as a secretary in a primary school. Three banks turned them down for a mortgage because of their modest income before they managed to secure a loan. 'Our first Christmas in the house, the Christmas tree fairy lights failed, so we had a choice between replacing them or getting a present for our four-month-old daughter.' In 1979, just two years later, interest rates had doubled to 17pc as the country grappled with soaring inflation driven by oil shocks and the end of the gold standard. House prices had risen rapidly in the 1970s, meaning most homeowners avoided falling into negative equity despite rising mortgage costs. But homeowners like Jane, who had bought just before rates spiked, did not have this buffer. The couple's payments soared. Jane, who had quit her job to raise their daughter, started childminding for 80p an hour. She considered pawning her engagement ring to make ends meet. 'It was horrendous, rates kept going up and up, it was a very scary time.' The couple still live in the same property 48 years later. After building an extension to add an extra bedroom, the house is worth around £250,000. Sandy was made redundant 20 years ago, and they used his redundancy money to pay off the remainder of the mortgage. Apart from a small savings pot, the house is the couple's only asset. While Anderson feels fortunate to have reaped the rewards of the property boom, she considers the gains hard-won. 'We didn't have a foreign holiday until my daughter was 14 – we went to a caravan in Scotland a couple of times. We had one old banger of a car. We needed to be frugal. 'I hate to think of young people with a £250,000 mortgage today. But I defy anyone to say we all had it easy.' Boomers missing out Not all boomers enjoy the financial safety net that comes with owning a home. The number of private renters aged 55 to 64 rose the most steeply out of any age bracket between 2009 and 2022, up 66pc to 492,000, according to official data. Those aged 65 and over were the second highest-growth group, rising by 33pc to 433,000 households over the same period. Data from the English Housing Survey 2021-22 showed that almost 6pc of people aged 65 to 74 were in rent arrears – more than any other age group. Rob Trewhella, 69, is one boomer who has been left behind by the house price gold rush. He bought a home in Cornwall for £55,000 at the peak of a 1980s property boom that was fuelled by cheap credit and a motoring economy. But within two years, a sharp rise in interest rates caused house prices to tank. A valuation revealed that the property was now worth less than what he had paid for it, meaning he was in negative equity. No longer able to afford the mortgage payments, he sold the house for a loss and has been renting ever since. The same property, which has since been renovated, is now on the market for £270,00. Trewhella worked in a family butchers for 15 years before retraining as a tree surgeon. Later in life, he spent three years working as a taxi driver before health problems forced him to give up this job last year. 'I paid tax for 51 years, and I've still got a lot I can offer people,' he says. He now pays £675 a month, plus £130 in council tax for his rented property in Penzance. His only source of income is his state pension, forcing him to dip into his savings each month. 'Property prices have gone sky-high, especially down here in Cornwall, with all the people buying second homes – that's also removed a lot of long-term rental stock and pushed up rental prices. 'There's a range of circumstances why people are living on their state pensions – they might be widowed or have lost money in an investment. We haven't got a snowball's chance to get back on the property ladder.' But having a mortgage carries its own risks. Some mortgage prisoners are in 'closed book' mortgages taken out before the financial crisis and held by firms no longer offering new loans. This means they are unable to switch from their current – often hugely expensive – mortgage deal to a cheaper one, even though they are up to date with payments. Many others are simply too old to be able to secure a new mortgage, leaving them with no option other than moving on to unaffordable repayment plans or selling up to pay off the debt. Assumptions about wealth The fact that some boomers have missed out will be of little comfort to younger generations struggling to afford their first home, even as the intergenerational wealth gap widens. A Resolution Foundation study found that between 2006-08 and 2018-20, median wealth among British people in their 60s rose by 55pc in real terms, but median wealth for those in their 30s fell by 34pc. At the same time, the share of Britain's wealth held by the under-40s has fallen from 7.5pc in 2010 to 4pc today. The idea that boomers are hoarding the nation's wealth is used to justify demands on older people that would otherwise seem unreasonable. Wealth advisers have warned of a rise in family members pressuring their elderly relatives into releasing equity from their homes to finance their own house-buying, even when it harms their relatives financially. The Tony Blair Institute think tank has called for larger properties to be taxed more to encourage owners to downsize and make room for younger families. But Hilary Burkitt, of old-age financial hardship charity, Independent Age, says the debate around intergenerational fairness ignores people like Trewhella and Anderson. 'There's an assumption about wealth that applies to older people. What's missed is the fact that there's a significant and growing number struggling financially in later life, and housing plays into this. 'The majority of older people in poverty own their own homes. We also hear from homeowners who have paid off their mortgage, but are finding it hard to keep warm or make repairs. Being a homeowner doesn't mean you're protected from financial issues.' Trewhella thinks it is 'absolutely unfair' to assume all boomers are wealthy, but is determined to remain upbeat about his circumstances. 'I do worry about my later years. It would be nice to know when I was going to depart, because then I could decide how much money I'd need. Renting rather than owning property is a massive part of that. 'But I don't feel envious. I spend a lot of time in my friend's garden. My mental health is in a good place.'
ABC News
3 hours ago
- Business
- ABC News
Property prices continue to climb to new records
Australian property prices have scaled new record highs as demand for housing offsets buyer concerns about the Reserve Bank's shock call to hold interest rates steady in July.
News.com.au
14 hours ago
- Business
- News.com.au
RBA fallout: shock twist as home prices surge to record high nationally
Australian property prices have climbed again to another record high over the past month as buyers capitalising on interest rate cuts slug it out over a dwindling pool of fresh real estate listings. PropTrack figures released today revealed national values rose 0.3 per cent over July and are now about 5 per cent higher than they were at this time last year. Adelaide recorded the strongest growth in the country. Perth, Brisbane and Hobart also recorded high growth, while rises in Sydney and Melbourne were more subdued. Nationally it was the sixth successive monthly rise in prices but the smallest gain since the RBA announced the first of two interest rate cuts in February. REA Group economist Anne Flaherty said the Reserve Bank decision to keep interest rates on hold at its last monetary meeting in early July may have moderated the pace of price growth in some markets. 'It may have encouraged more caution among some buyers,' she said. PropTrack noted that the slower, steadier growth over July was also the result of a brutal tug of war emerging across key markets. Low listing levels and falling interest rates heated competition for property on one hand, but this was moderated by crushing affordability constraints and economic uncertainty. The result has been a mixed market, exhibiting characteristics of boom conditions in some city suburbs but a slowdown in others. Agents revealed demand in the bigger capitals has also been more listing-specific than usual. Buyers normally gravitate more toward the best quality stock but this trend has been even more pronounced than usual. Part of the reason is that much of the activity pushing prices up appears to be coming from upsizers, who can often be more selective with their property choices. Investors and first-home buyers, who often snap up the more dated homes or those with some drawbacks like a location on a busier road, have been less active. The result is a situation where older housing or properties with major drawbacks are lingering on the market, while the top listings in 'blue chip' suburbs are attracting extreme levels of demand. Smaller capitals like Adelaide and Perth have even been an exception, attracting high levels of interstate investment activity largely because of the lower prices and prospect more capital growth. 'Adelaide growth has been more surprising because it has outperformed the rest of the country for so long,' Ms Flaherty said. 'Investors are having a huge effect there. That's part of what's driving up prices and putting Adelaide ahead of the rest of the country for home price rises.' PropTrack revealed that capital city growth exceeded rises in regional real estate markets over recent months. This was a trend that had been fairly entrenched since the prior interest rate hikes of 2022 of 2023, which had sent buyers searching for cheaper markets offering better value. Ms Flaherty said another reason cities like Adelaide and Brisbane were outperforming was because of the extreme price rises they had recorded over the last five years. She pointed out that Brisbane prices were an average of close to double what they were in 2020, with Adelaide seeing a similar but smaller rise. 'There are many homeowners who now have a lot of equity they can use to upgrade to their next house and all that extra spending pushes up prices even more.'
News.com.au
14 hours ago
- Business
- News.com.au
Sydney home prices: staggering new record revealed
Sydney property prices have climbed again to another record high over the past month as buyers capitalising on interest rate cuts battle over a dwindling pool of fresh real estate listings. PropTrack figures released Friday revealed growth has remained steady across the city, with every major region recording home price rises over July – albeit at a slower pace than earlier this year. Dwellings values across the Greater Sydney area rose 0.12 per cent for the month and are now about 3.3 per cent higher than they were at this time last year, but there was significant variance across areas. Growth was higher in the southwest, including areas like Liverpool, as well as in the suburbs around the Sydney CBD, where prices are now 2-3 per cent higher than in May, after the last rate cut. PropTrack economist Anne Flaherty said these seemingly small increases in percentage terms were actually substantial in dollar values given how high prices already were. 'Sydney prices are so elevated that even a 0.5 per cent increase can mean buyers paying thousands more,' she said. 'It may seem like minor increases, but buyers are spending much higher amounts.' Citywide the median price of a house is now $1.56 million, while the median unit price is $860,000 – both record highs. Sydney houses are on average about $500,000 pricier than those in Brisbane, Australia's next most expensive capital, and about $580,000 more expensive than in similarly-sized Melbourne. PropTrack noted that the slower, steadier growth over July was the result of a brutal tug of war emerging across key markets. Low listing levels and falling interest rates heated competition for property on one hand, but this was moderated by crushing affordability constraints and economic uncertainty. The result was a mixed market, exhibiting characteristics of boom conditions in some city suburbs but a slowdown in others. Agents revealed demand has also been more listing-specific than usual – buyers normally gravitate more toward the best quality stock but this trend has been even more pronounced than usual. Part of the reason is because of the makeup of the buyer pool. Much of the activity pushing prices up appears to be coming from upsizers, who can often be more selective with their property choices. Many have been active within pricier inner suburbs. Investors and first-home buyers, who often snap up the more dated homes or those with some drawbacks like a location on a busier road, have been less active. The result is a situation where older housing or properties with major drawbacks are lingering on the market, while top listings in 'blue chip' suburbs are attracting extreme levels of demand, lifting prices. Agents reported a growing fear of missing out is emerging among buyers who are wary of what impact further interest rate cuts might have. Wilberforce resident Brady Harris, with partner Brie, is selling his home on King Rd in the hope of using the proceeds for buying investment properties. He said rate cuts were motivating the move. 'History suggests prices are going to keep going up if they cut rates again. We'd like to own more properties when this happens,' Mr Harris said. The couple's home on King Rd will go to auction August 16 with Ray White-North Richmond agent Cindy Cash. 'It's become very hard with the cost of living to get ahead financially and we feel like property investment is one of the few ways you can do it,' Mr Harris said. 'It's just really hard to do in Sydney. It's just so expensive.' SYDNEY'S TOP GROWTH CITY REGIONS Sydney region 3-month growth South West 3.89% CBD and Inner South 2.57% Northern Beaches 2.32% Canterbury-Bankstown/St George 1.91% Outer South West 1.63% Outer West/ Blue Mountains 1.52% Hills District 1.46% Eastern Suburbs 1.35% Sutherland 1.30% Central Coast 1.03% Ryde 1.00% Blacktown 0.83% Parramatta 0.74% Inner West 0.09% North Shore 0.09%
ABC News
19 hours ago
- Business
- ABC News
Home prices rise across all capital cities in July, as Cotality index lifts for sixth month
Australian property prices have scaled new record highs as demand for housing offsets buyer concerns about the Reserve Bank's shock call to hold interest rates steady. National dwelling values rose 0.6 per cent last month, marking the sixth consecutive monthly increase, according to figures from property research firm Cotality (formerly CoreLogic). The median home value is now $844,000, an increase of 3.7 per cent in a year. "That [growth] started with the cash rate being reduced in February," said Eliza Owen, head of research at Cotality. "Overall, it's taken home values about 3 per cent higher through the year to date, or the equivalent of another $25,000 being added to the median dwelling value in Australia. "And we're seeing these gains right across the country now." All capital cities saw price growth in July, with Darwin recording the biggest monthly increase at 2.2 per cent. Darwin is Australia's most affordable capital city. "When it comes to the Darwin market, it's a low price point," Ms Owen said. "But it's also got pretty strong gross rent yields so no doubt, investors are seeing a bit of an opportunity there not just for short term capital growth but for decent rent return." House values (+1.9 per cent) once again outpaced gains in units (+1.4 per cent). Notably, the difference between the national median house and unit value has hit a record high of 32.3 per cent, or around $223,000. Capital cities (+1.8 per cent) were also outperforming regional markets (+1.7 per cent), after nine months of the quarterly trend rate of growth favouring country areas. The rise in property prices comes despite the RBA's decision in early July to hold the cash rate at 3.85 per cent. However, with inflation continuing to slow, a rate cut is now widely expected when the RBA's board meets on August 12. History shows that when interest rates go down, house prices go up. The exceptions to that rule were during the recession of the late 1980s and early 1990s, and around the time of the global financial crisis, said AMP chief economist Shane Oliver. "When interest rates go down, it enables people to borrow more when they show up at the bank," Mr Oliver said. "Basically, for somewhat an average earnings, and a 20 per cent deposit, you can borrow about $9,000 to $10,000 extra from a 0.25 per cent interest rate cut." The correlation between rate cuts and house price growth was something Melbourne real estate agent Matthew John was attuned to. Mr John said optimism about future rate cuts had already started to flow through to the amount buyers were willing to pay. "Even perceived rate cuts are helping people understand that the market's probably heading in an upwards trajectory in terms of pricing," Mr John told ABC News. The agent said increased optimism on top of a seasonal mismatch between supply and demand, particularly for higher quality properties, was resulting in more of a "seller's market." "We're starting to see more bidders at auction, more offers happening prior to auctions as well for people trying to jump on something, especially buyers that have missed out on other properties," Mr John said. Data from REA Group's PropTrack also demonstrates the strength of the housing market, with national values up 0.3 per cent in July. Adelaide led the monthly gains (+0.9 per cent), followed by Hobart (+0.5 per cent), Brisbane (+0.4 per cent), and Perth (+0.4 per cent). However, in contrast to Cotality's monthly data, REA Group's data showed monthly and annual declines in Canberra values of 0.1 per cent. Any benefits from increased property values favour those already in the market. "To have house prices taking off again is not great for first home buyers," Mr Oliver told ABC News. "Prices to average earnings is more than double what it was 20 years ago. "And so yeah, you've got lower interest rates and that's good news. "But, by the same token, you've got to pay a lot more to get a home compared to the situation in the past." Mr Oliver said the Australian property market could be reaching its price peak. "I would think we're getting close to that now," he said. That was because, as Mr Oliver explained, the amount of money a first home buyer could borrow was now way below what they would need to get into the property market. "At the moment, they're relying on the Bank of Mum and Dad, but there's a limit to that. And of course, it's also grossly unfair. "Ultimately, there is a limit to this, but it's unclear as to when we're going to hit that limit." Ms Owen agreed that affordability would at least slow the pace of price growth, even with further rate cuts. "Even though we're continuing to see price growth, it's a little bit more subdued now compared to what we saw at the onset of COVID, because even though interest rates are falling, they're at a much higher setting," Ms Owen said. "Affordability is probably the biggest headwind to growth being any stronger than what it's sort of running at at the moment." But in bad news for those in the rental market, Cotality's latest data also showed that rents had accelerated. National rents rose 1.1 per cent in the three months to July, up from a recent low of 0.5 per cent in the September quarter last year. Indeed, rents went up in all capital cities. The Darwin unit market recorded the fastest rate of quarterly growth, up 2.9 per cent, followed by Darwin houses at 2.2 per cent and Hobart houses at 2 per cent. Ms Owen said a shortage of available rentals, combined with income growth, was pushing up rents in some markets. "We're starting to see a bit of income growth that's putting particular pressure on high-end rental markets, as cities like Sydney, for example, essentially, supply levels remain very tight in the rental market, but income growth means you've got a little bit more demand there as well."
