The old get richer as under-34s fall behind

Average asking prices have jumped nearly £25,000 over the last 12 months
13 April 2012

Older people have seen their wealth treble in ten years thanks to soaring property prices while young adults have become poorer, the Bank of England says today.

Those between 55 and 64 have been the biggest winners, with the boom in the property market helping their average wealth increase to a record £150,000.

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But an alarming report from the Bank says the young, which includes everybody under 34, are the biggest losers.

Over the last decade, their net financial wealth has collapsed to close to zero because so many have been unable to climb on to the property ladder.

This has created a 'generational gap' where property prices mean parents' wealth has soared while their children have been left with almost nothing.

House prices have risen 205 per cent over the last decade, which been such a boon for the older generation.

The biggest winners are those who bought their houses or flats many years ago for a relative bargain, and are now living in a home worth a fortune.

Because they bought when prices were low, many took out only small mortgages which they have repaid and are now 'debt free and asset rich'.

Many are among the growing army of 'property millionaires'. Every day, 15 homes are sold for £1million or more, according to the Land Registry.

But the Bank of England's figures, published in its quarterly report, show the housing boom has only brought riches for the older members of society.

In its figures, it looks at the net financial wealth, including housing assets, of each age group in 1995, 2000 and 2005.

Four age groups - 35-44, 45-54, 55-64 and 65 and over - have seen their average wealth shoot up.

For example, a typical person aged 65 or over had wealth of £40,000 in 1995, £50,000 in 2000 and nearly £100,000 in 2005.

The only catch for the older generation is that their housing wealth means record numbers could be forced to pay inheritance tax when they die. One in three detached homes in Britain are now worth more than pound;300,000, the threshold at which the tax is charged at 40 per cent.

But the two younger age groups - 18-24 and 25-34 - have been left in the cold. The youngest age group has no recorded wealth, and the older age group has fallen close to zero.

The research said: 'A decline in homeownership rates among 25- to 34-year-olds likely explains why that group's median net financial wealth plus housing assets and median indebtedness fell between 2000 and 2005.'

High prices, which are being fuelled by too many buyers chasing too few properties for sale, mean they are forced to rent, not buy.

The majority of first-time buyers can afford to buy only because they receive help from their parents, who typically lend them a deposit.

There is not one region in the whole of England and Wales where the average price is below £155,500.

In London, where prices are highest, the average asking price is £366,302, which is 16 times the average salary of about £23,000. Last week, the Government said it expects a record 223,000 new households to be formed each year but just 170,000 homes are being built to house them.

This puts house prices under even more pressure because there are too few homes to meet demand.

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