The unfairness of Stamford’s Baby Boomer’s £1.18 billion windfall? (Part 1)

Recently I was having a chat with one of my second cousins at a big family get-together. The last time we had seen each other, their children were in their early teens.  Now these children are grown up and have partners, pets and children of their own. 

Wow – how time flies!

We were discussing ‘the old days’ when the country had 15% interest rates and how the more mature members of our family had to endure the 3 day week, 20% inflation and the threat of nuclear annihilation in 4 minutes.  Foolishly, I said that today’s youngsters had never had it so good with so many opportunities!

 

Trust one of my cousin’s children to have gained some financial/economics qualifications before attending Law School, as they debated with me the genuine economic predicament of ‘Millennials’ and how a combination of student debt, unemployment, global proliferation, EU migration and rising house values is reducing the salaries and outlook of masses of the UK’s younger generation, causing an unparalleled disparity of wealth between the generations. So, of course I asked why that was. 

They said Millennials were paying the price for the UK’s most spectacular bookkeeping catastrophe to date (bigger than the banking bailout following the credit crunch).  Back in the 1950’s and 1960’s nobody predicted life expectancy would be so high, or in such abundant numbers. The pensions that were promised in the past (be that Government State Pension or Company Final Salary Schemes) which appeared to be nothing fancy at the time, are now burdensomely over-lavish, and that is hurting the Millennials of today and will do so for years to come. 

Bringing it back to property, my young “second-cousin-once-removed-soon-to-be-lawyer”, stated that baby boomers born between 1945 and 1965 have been big recipients of the vast rising house prices over the 1970’s/80’s/90’s and 2000’s.  Add to that their decent pensions, meaning cumulatively, their wealth has grown exponentially through no skill of their own.  

This disparity of wealth between the older and younger generations could have unparalleled consequences for the living standards of younger Millennials.  So, do we have a problem? 

Since 1990, the average value of a property in Stamford has risen from £108,700 to its current level of £316,500.  As there are a total of 5,681 homeowners aged over 50 in Stamford; that means there has been a £1.18bn windfall for those Stamford homeowners fortunate enough to own their own homes during the property boom of the 1990s and early 2000’s. 

 

I must admit that the growth in property values in the 1990’s and 2000’s certainly helped many of Stamford’s baby boomers. The figures do appear to put into reverse gear the perceived wisdom that each generation gets wealthier than the previous one  … and so with all this wealth, the figures do ‘back up’ the youngster’s argument that Millennials are being priced out of home ownership.

 

Or do they? Are they? 

 

Next week, I will carry on this discussion where I will give the Baby Boomer’s defence to the prosecution’s case!