Why ‘peak death’ won’t solve the housing crisis

“The thinking goes that, within a decade or two, baby-boomers—the bumper generation born between roughly the early 1940s and early 1960s—will begin to sell up, as they first start to downsize, then move into elderly people’s accommodation and, eventually, to the great old-folks’ home in the sky. As their properties are put on the market, supply will rise, depressing prices and bringing ownership within reach for more people.”

However, there are reasons why the Millennial housing dividend may never materialise.

At the very least, it looks likely to be delayed. As the anonymous author of The Economist article notes, British retirees are reluctant to downsize – an aversion ascribed to a shortage of “good retirement housing”. That’s putting it mildly. We should be designing visionary retirement communities designed to keep older residents independent, active and connected. Instead, we throw up soulless blocks along busy main roads,  with the excuse that the elderly are too deaf to be bothered by the noise. Would you swap a much loved family home for that? The planning wars should have taught us that people don’t want poorly designed, badly integrated housing built at all – let alone for themselves to move into.

Of course, being mortal, the Baby Boomers can’t stay in their homes forever (not unless they turn them into mausoleums). So even if the Millennial housing dividend is delayed, it has to materialise at some point, doesn’t it?

Again, don’t count on it. By the Peak Death year of 2037, today’s twenty-somethings and thirty-somethings, will be in their forties and fifties – quite possibly too old to get a conventional mortgage, if they’re first time buyers. Furthermore, while the passing of the Baby Boomers may increase supply to the housing market, we shouldn’t bet on reduced demand. In a globalised economy the British property market is an attractive destination for surplus capital.

Also, the Baby Boomers won’t just be vacating their property upon departure, but bequeathing it to their inheritors. Those who call for this cascade of wealth to be confiscated can forget it. Inheritance taxes are deeply unpopular with voters, being seen as cruel and unfair – especially when applied to family homes. And I dare say that many of the minority currently in favour will reconsider as soon as they find themselves in line to benefit.

The real challenge is to stop the capital flows of ‘Peak Inheritance’ from finding their way back into the housing market – and especially not into buy-to-let investments. 

To extend the opportunity of home ownership to ‘generation rent’, we must act now not in 2037. We need community land trusts for those disadvantaged by, or excluded from, the conventional housing and mortgage markets; and we need land value taxation and other measures to keep speculators, both domestic and international, out of housing.

Whether or not one blames Baby Boomers for the housing crisis, waiting for them to move to another plane of existence is not the solution.

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Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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