The over-65s will account for more than half of housing wealth by 2030, meaning there needs to be a shift in the type of housing on offer, research claims.
A report by the Building Societies Association (BSA) and International Longevity Centre (ILC-UK) says currently the over-65 age group own around £1.5 trillion in housing wealth – accounting for 39% of self-reported housing wealth in the country.
Based on current borrowing and housing trends, by 2030 the researchers project that this will more than doubled to £3.3 trillion – 58% of all housing wealth.
Meanwhile this older age group is also likely to account for a rising quantity and share of total mortgage debt, shifting from £20.1bn, or 2%, to £39.9bn, approximately 4%.
The report says the mortgage market is witnessing a “marked evolution” from the ‘traditional route’ of individuals buying their first homes in their 20s, trading up in their 30s and 40s, paying off debt in their 50s and 60s and then entering older age with little or no mortgage debt.
Instead, home ownership among those aged 20 to 29 has fallen from 53% to 38%, while for those between 30 to 39, home ownership has fallen from 73% to 65%.
The report said: “Today, many first-time buyers are delayed from stepping on to the property ladder by factors including low supply of new homes and higher house prices, greater student debt, persistent low real income growth and challenges in saving for a deposit.
“This shift in the housing market is part of a wider cultural change in how we live our lives. With life expectancy having significantly increased, those who are 65 today can expect to live to 90. People today are also working longer, and currently one in ten people aged over 65 are employed.
“Due to these factors, as the population ages and people become more prosperous and likely to work for longer, there will be a greater capacity for people to borrow into older age.”
Paul Broadhead, head of mortgage policy at the BSA, said: “Top priority must be given to radically increasing housing supply across all tenures, including recognising shared ownership as a tenure in its own right.
“We must also respond as an industry to reflect the changing needs of customers. This will include an increasingly intergenerational approach to home ownership, as parents and grandparents borrow to release some of their housing wealth to support the younger generation. It is the combination of multiple factors that will drive greater levels of mortgage borrowing in later life.”
Ben Franklin, from the ILC-UK, added: “The housing market must better adapt to our ageing society, building more homes for all ages across a range of tenures.
“Over the course of a lifetime, including in retirement, consumers will need to have access to the right mortgage products and advice in order to maximise their long-run financial wellbeing.
“Building societies have made a good start in this regard, but this is a whole of market challenge that will ultimately need whole of market solutions.”