Which generation had the worst property deal?

UK Buyers today will have to spend seven times their salary on a home — but those in the 1970s faced double-digit mortgage rates.

Much debate rages around which generation actually had it worse when it came to getting onto the property ladder. Many baby boomers, those born between 1946 and 1964, remember the painful days of mortgage rates as high as 17 per cent, while today’s first-time buyers are contending with comparatively higher house prices.

The estate agency Hamptons looked at the data to try to work out which generation had the worst deal. Here is what it found.

Whose homes lost value?

Despite an overall rise in house prices those Generation Z first-time buyers who got on the ladder in 2020 would be the first to have experienced real-terms property values fall during their first five years of ownership. Average prices have dropped 3 per cent when adjusted for inflation, accordiong to Hamptons.

A typical millennial (those born between 1981 and 1995) who bought their first home in 2011 in their mid-twenties made an average real-terms gain of 13 per cent over five years. Whereas a Generation Xer (born between 1966-1980) who bought their first home in 1996 enjoyed 44 per cent growth in real terms over the first five years.

Hamptons said that a baby boomer first-time buyer in 1979 benefited from average real-terms house price growth of 35 per cent in the first five years. Someone of the so-called silent generation (born between 1928-1945) who bought a first home in 1968 saw the value of their home rise 106 per cent in real terms in the first five years.

Having struggled to get on the property ladder, the youngest homeowners now face being stuck on the first rung.

Whose house prices boomed?

In April 1968 the average house price was 4.29 times the typical annual salary, according to the Office for National Statistics. This, apart from two spikes in the early 1970s and late 1980s to early 1990s, remained largely constant for the rest of the 20th century. An average home in April 1979 was 4.29 times the average wage, and 3.8 times in April 1996.

But a period of sustained house price growth followed, with the average property rising 173 per cent between 1995 and 2007 in real terms, causing the gap between wages and property values to widen.

In April 2011 the average home was 6.58 times the average salary. In April 2020, this had increased to more than 7.69, hitting a peak of 8.23 in September 2022.

David Fell, an analyst at Hamptons, said: “House prices have risen much faster than wages over the last couple of decades mostly thanks to falling mortgage rates. Since interest rates were reduced to rock bottom levels in response to the 2007 house market crash, buyers could generally borrow significantly more money than someone earning the same salary 20 or 30 years ago, pushing prices up.”

Whose payments were highest?

Between the mid-1970s and early 1990s the Bank of England base rate, which influences mortgage rates, was often in double figures, hitting a high of 17 per cent between November 1979 and July 1980.

In response to the 2007-08 financial crisis it was cut to 1 per cent in February 2009 and remained at this rate or lower until June 2022, when the Bank began raising it in an attempt to tackle inflation. It hit a high of 5.25 per cent in August 2023 and is on the way down again now — this month it was cut from 4.25 per cent to 4 per cent. The average mortgage rate offered across the market is 5 per cent, according to the analytics firm Moneyfacts.

But Neal Hudson from the property market researcher Residential Analysts said that lower mortgage rates only tell part of the story.

“Yes the rates were higher in the 1970s and 1980s, but these people were borrowing much lower multiples of their income,” he said. “Buyers are now borrowing nearly double what they were back then, so it takes a much lower mortgage rate to create the same level of pain.”

Someone paying the average house price of £213,000 in January 2020 would have paid £73,900 in mortgage payments on the average rate of 3 per cent. Hamptons based its calculations on someone with a 10 per cent deposit and a 25-year mortgage term.

A homeowner who bought in 2011 — when the average house price was £234,000 and the base rate was 0.5 per cent — would have spent £48,700 on their mortgage in the first five years, assuming they had the average mortgage rate of 1.7 per cent.

Yet someone who bought at the start of 1979, when the average house price was £13,800 and the base rate was 14 per cent, would have spent £41,500 on their mortgage in the first five years of homeownership, assuming the average 9.6 per cent mortgage rate and adjusting for 2025 prices. The 1979 average house price would be £55,100 in real terms today.

Fell said: “Millennials faced higher purchase prices than the previous two generations but much lower interest rates, while the boomers and Gen X paid higher interest rates but the prices were lower.

“Gen Zers, however, are being hit with relatively high prices and relatively high interest rates now as well.”

Who has the least equity?

Sluggish house prices combined with higher borrowing costs will also make it more difficult for those looking to move because they will struggle to build up enough equity to fund a switch to a bigger home.

Hudson said: “Previous generations have benefited from house-price growth to allow them to move into larger properties, whereas these days, it’s much harder and so you’re seeing people moving much less frequently.”

Using Bank of England data that predicts mortgage rates up to 40 years in the future, Hamptons estimates that the average homeowner who bought in 2020 would pay about £191,000 across the first half of a 25-year mortgage term. Over the second half of their term, they would pay £208,000.

It is a far cry from the experience of older generations. The typical baby boomer first-time buyer paid £93,900 in real terms in the first half of their 25-year mortgage, dropping to £64,700 in the second half. Those belonging to Generation X paid an average of £112,294 in the first half, falling to £75,697 in the second.

Recent increases in mortgage rates have also caught out millennials. Hamptons forecasts that this generation will have to pay £185,600 on average in mortgage payments across the second half of their mortgage, well above the £117,500 they paid the first half.

“In previous generations, homeowners would have climbed up the career ladder and inflation would have made the second half of their mortgage easier financially,” Fell said. “With millennials and Gen Z likely to see their mortgage payments rise, it will erode that feeling that their loans are getting more manageable.”

He said this was likely to mean fewer members of those generations paying off their mortgage early — a key milestone for anyone wanting to retire early.

What about the renters?

Those waiting to buy their first home generally need to either live with their parents or navigate the rental market, where costs have never been higher.

The average monthly rent in July 2025 was £1,373 a month — 47 per cent higher than ten years ago. It cost more than three times as much in real terms to rent in the last five years than it did for someone who started a five-year tenancy in 1979.

Someone who started renting in January 2020 would have paid an average of £86,750 over five years, having been caught up in the post-pandemic boom in rents. Someone who started a tenancy in 2011 would have paid £74,283 over five years in real terms, while someone who started renting 1979 would have paid £23,740 in today’s prices.

Higher rental costs make it more difficult to build up enough savings for a house deposit, exacerbating the challenges of getting on the property ladder amid inflated house prices.

For boomers and those in the silent generation, renting was cheaper than paying a mortgage. the average tenant who started renting in 1968 would have paid £6,500 over the first five years in real terms, compared with £7,990 in mortgage payments. Rental costs for someone who started a tenancy in 1979 were £23,740 for the first five years, compared with £41,470 in mortgage payments.

But the pendulum swung the other way for the first time in October 1992, the month after Black Wednesday, when the pound crashed and Bank rate was cut. Since then, monthly rental payments have mostly remained higher than mortgage costs, according to Hamptons.

The average buyer who bought in 2020 and paid mortgage payments for five years would have paid £12,900 less than the average renter. “This has created a bit of a financial cliff edge between those who bought and those who didn’t, in a way which didn’t exist for older generations,” Fell said.

Source: The Sunday Times

The UK hates stamp duty. What’s the alternative?

When it emerged last week that the chancellor was considering scrapping stamp duty, many will have started celebrating. However, the jubilation was short-lived as a host of alternative property tax suggestions began to surface. The Treasury is said to be contemplating a shake-up as it looks to raise billions of pounds in the autumn budget.

Stamp duty brought in £13.8 billion over the past tax year, while capital gains tax (CGT), which is charged on the sale of second homes, shares and art, raised £13 billion. Rachel Reeves, the chancellor, is now understood to be considering charging CGT on the sale of high-value homes, with the limit being mooted at £1.5 million. At the moment you do not pay CGT when you sell your main home, although it is applied to sales of second or additional properties.

Critics have long warned that high stamp duty charges stifle the housing market, but have now said that charging people when they sell their main home could cause even more damage. Is there really a better way to tax property than the present system; one that is fair and effective? We look at how the rest of the world does it.

WHAT IT’S WORTH

Taxes on property, such as council tax, stamp duty and CGT, make up 12 per cent of the total tax take in the UK. This is on a par with the US and Canada and is one of the highest percentages among the 38 wealthy nation members of the Organisation for Economic Co-operation and Development (OECD).

The average across the OECD was 6 per cent in 2022. “The fundamental problem with property taxation is that what makes sense in economic terms isn’t easy in practical terms,” said Anna Clarke from the Housing Forum, a trade body. “You ideally want to tax the value of the asset annually to encourage people to vacate higher-value homes if they don’t need them. And you don’t want to tax moving, because that deters downsizing and people moving for work. But annual taxes will add to the bills of those who may not have a lot of income — such as asset-rich, cash-poor pensioners

THE VARIATIONS

Buyers pay 2 per cent stamp duty on between £125,001 and £250,000 of a purchase price; 5 per cent between £250,001 and £925,000; 10 per cent between £925,001 and £1.5 million; and 12 per cent on anything above that. There is a 5 per cent surcharge on the purchase of additional or second homes. First-time buyers pay only 5 per cent of purchase price between £300,001 and £500,000. Barring the odd stamp duty holiday, those rates have been frozen since December 2014, even though the average UK sold price has risen 52 per cent. Other countries have far lower rates of tax.

The US equivalent, property transfer tax, varies by state and 12 states don’t have one at all. The highest charge is in Delaware — 4 per cent of the sale price with the bill split equally between buyer and seller. French property transfer taxes vary by region but can be up to 5.81 per cent of the purchase price whereas in the Netherlands the rate for someone buying a main home is 2 per cent and in Sweden it is 1.5 per cent.

In Canada it varies by region but all are lower than the UK. The most populous province, Ontario, has a top rate of 2.5 per cent of purchase price, charged on homes worth more than CAN$2 million (£1.07 million). An average of 4 per cent of UK homes have changed hands every year since the 2008 financial crisis, according to the investment bank Jefferies. About 25 per cent of 2,000 homeowners polled by Barclays in April said the tax was the biggest barrier to moving house. Jonathan Pierce from Jefferies said: “Most economists agree it is a bad tax that clogs up the market and weakens growth.” One big problem with council tax, which was introduced in 1993, is that it is based on out-of-date property valuations.

Council tax bands in England and Scotland, which range from A (the lowest) to H (the highest), are still based on April 1991 house prices, with Scotland’s bands set at two thirds of the value of those in England. In Wales, where bands range from A to I, values are based on 2003 prices. Northern Ireland uses the rates system instead, with what you pay linked to property values in 2005.

This means that areas where house prices have risen most since 1991, especially London and the southeast, pay less council tax relative to their property value than those where house price growth has been more sluggish. In Blackpool a band D property will pay £2,392 in council tax, which works out at 1.52 per cent of the average property price of £157,368 for the area. This makes Blackpool the area with the highest tax rate, proportionally, in England, according to the estate agency Hampplus don, the band D bill is the lowest in the UK at £990 a year — 0.15 per cent of the average property price of £652,287.

John Muellbauer, a professor of economics at the University of Oxford, said it was “probably the most regressive property tax in the world. In each local authority the poorest homes pay the highest tax as a percentage of their property value.” In the US property taxes are usually regularly revalued — sometimes annually or every two to three years. Homeowners pay a percentage tax made up of as many as 14 separate levies set by states, counties and school boards to fund them.

Yet a UK revaluation could be divisive because those in London and the southeast, where property values have increased most since 1991, could be hit with much higher bills. “I remember chatting to someone a few years back who’d just spent the last two years of her life working on the government’s revaluation of council tax only for that to be abandoned as too political,” Clarke said. “The longer we leave the system the more out of date it gets and the bigger the shock — to Londoners mainly — of reform would be.”

SHOULD WE TAX SELLERS INSTEAD OF BUYERS?

 Applying CGT to the sale of your main home would mean that you would be taxed twice — once when you bought it, and again when you sold it, assuming that it had gone up in value. CGT is charged at 24 per cent for higher-rate taxpayers and 18 per cent for basic-rate taxpayers.

Main homes are exempt from any kind of CGT in 19 of the OECD countries, excluding the UK, while another 16 offer some kind of relief, depending on how long someone has lived in their home, so charging capital gains on main homes would be unusual. Taxing sellers’ gains might sound like a good idea, as they would have the funds from a property sale to pay the bill, and the Treasury could cash in on soaring house prices.

HM Revenue & Customs says that not charging CGT on someone’s main home costs it £31 billion a year. Yet changing the rule may not necessarily raise that much because homeowners would simply not sell. Jonathan Brandling-Harris from the estate agency House Collective said: “If you knew that selling your home would trigger an additional tax bill on top of the cost of moving and buying, you simply would not move unless you absolutely had to. That means fewer transactions, less choice, and a market that grinds to a halt.”

WHAT’S THE ANSWER?

While the government cannot afford to make tax cuts, Pierce said halving stamp duty rates for those buying their main home, which would lose the Treasury about £3.5 billion a year, could pay for itself. That’s because there would be more sales, while homeowners would free up housing wealth that they could then spend by downsizing. He said there was as much as £5 trillion of trapped wealth in privately owned homes. During the stamp duty holiday from July 2020 to June 2021, when purchases of up to £500,000 incurred no tax, Pierce said house sales rose 25 per cent.

Reductions of housing equity, either through downsizing or remortgaging, exceeded mortgage repayments for the first time since the financial crisis. “When a chain completes it tends to release equity from the stock, as those trading down often have less debt than is needed to purchase the same property by those trading up,” he said. “Older homeowners releasing equity might deposit the money in the bank, but some of that would almost certainly find its way into the real economy.”

Other suggestions are more radical. Muellbauer proposed replacing the top two council tax bands G and H, which cover 1.4 million of the highest-value properties in England and Wales, with a 0.5 per cent a year tax on their value. Foreign and second homeowners would pay 1 per cent. This would raise about £10 billion a year, he said. In turn higher rates of stamp duty for more expensive homes would be cut, which could boost sales. A proportional property tax similar to the US is something several campaign groups have called for.

The Treasury is reportedly looking at proposals from the centre-right think tank Onward, which would involve homeowners with properties worth more than £500,000 paying a 0.54 per cent annual tax on any value above £500,000 to replace stamp duty. Any home worth more than £1 million would pay 0.81 per cent on the portion over that threshold. The 5 per cent stamp duty surcharge on second homes would remain and those owners would also pay the annual property tax. It would also scrap council tax and replace it with a 0.44 per cent annual tax levied by councils on house value between £800 and £500,000 (a maximum of £2,196 a year). Someone with a £650,000 home would pay £3,006 a year — 0.44 per cent of £499,200 (the maximum £2,196) to their council and then another £810 a year — 0.54 per cent of the £150,000 portion above £500,000 to the government.

The annual tax would be paid by anyone who bought a home after it was introduced. Clarke suggested this transition could help to get round the political difficulties caused by some households suddenly paying a lot more — although the suggestion is you could avoid a new tax by not moving. Any changes would come with tradeoffs, and it is possible there is no perfect way to tax property that would leave everyone satisfied — simply piling more taxes on already stretched households will certainly not do that. 

Source: The Sunday Times

A Shrinking US Housing Market Means Upheaval for Buyers

Companies like Compass, Rocket, and Zillow are trying to create one-stop shopping venues.

The housing market is barreling toward its third bad year of home sales. Once demand roars back, real estate transactions could look different for buyers, sellers, and investors. Anemic home sales are accelerating a housing market reconfiguration long in the making. In the coming years, it may be more common to purchase a home from one of the big public builders than a local developer, or secure a mortgage from the same portal you used when shopping for a home.

Big real estate companies are building digital platforms to keep more parts of the home purchase transaction under one roof—and taking business from real estate brokerages and mortgage lenders. “Anything that makes things easier for people—that’s where the world is moving,” says Tim Bodner, PwC’s real estate deals leader.

The fight for dominance recently spilled into the courts. Compass, the largest U.S. brokerage by sales volume, sued listings portal Zillow Group over new rules regarding listings that are initially viewable only by its agents and their clients. The lawsuit isn’t just a fight over wonky listing rules, but a conflict about the shape of the future housing market.

Consumers have been backing away from buying a home for several years. The number of existing homes sold fell to nearly 30-year lows in both 2023 and 2024. In the first five months of 2025, homes sold at an average seasonally adjusted annual rate of about 4.1 million, down from more than six million as recently as 2021, according to National Association of Realtors data.

The whole sector is under pressure until sales climb to at least five million, says Leo Pareja, CEO of brokerage eXp Realty. That’s far away: The Mortgage Bankers Association expects existing home sales to ramp up in the coming years but to remain below five million through 2027, as prices hold firm and mortgage rates remain above 6%. The path ahead for consumers will look increasingly streamlined—and is rife with both opportunities and risks.

Shifting Winds

 It isn’t just buyers and sellers backing out of the market. The National Association of Realtors, the industry’s largest trade group, is budgeting for its membership to decline to 1.2 million in 2026, from nearly 1.6 million as recently as 2022. That’s in part “due to the housing market’s current headwinds,” a NAR spokesperson says.

“There’s going to be sort of a reckoning” if sales remain slow, says Columbia Business School professor of real estate Stijn Van Nieuwerburgh. “Probably a bunch of people are going to quit this profession altogether.” Where some smaller brokerages see trouble, others see buying opportunities. Compass, a $3.2 billion real estate brokerage based in New York, grew its ranks of principal agents nearly 42% in this year’s first quarter from the year prior, largely because of its acquisitions. “Most brokerages are really struggling financially,” says Rory Golod, Compass’ president of growth and communications. “They don’t have the size, the scale, and sort of the balance sheet to get through this.”

Consolidation is coming to homebuilding, too. At a time when more builders are offering buyer incentives or slashing prices, the big players’ economies of scale allow them to keep costs lower. “In a slower and choppier market, mergers and acquisitions get more common,” says Ali Wolf, chief economist of real estate research firm Zonda. Publicly traded home builders comprised 52% of all new home sales in 2024, a larger share than anytime since at least 2005, Zonda data show. That could rise as high as 65% in the future, says Wolf.

Perhaps most emblematic of where housing is headed is the coming unification of Rocket, the nonbank lender best known for mortgage origination, with mortgage servicer Mr. Cooper and brokerage and home-listing portal Redfin. The three companies “realize that we are stronger together than we would be apart,” says Varun Krishna, Rocket’s CEO. The combined company will be the largest mortgage servicer and second largest lender in the U.S., according to Inside Mortgage Finance data. Redfin, meanwhile, gives them “the brand name and real estate brokerage that they never had before,” says Wedbush Securities analyst Jay McCanless.

Across categories, consumers now expect a more personalized experience, says David Steinbach, global chief investment officer of Hines, a real estate investment manager with $90 billion in assets. “That consumer taste for a better service, better outcome— which only data can do—means the scaled groups are going to win. The big are going to need to get bigger in order to better serve the needs.”

The Future

Companies that derive earnings from the homebuying process—such as listing portals, mortgage companies, and brokerages—have long looked for ways to capture a bigger slice of the pie in a fractured housing market. They may have finally settled on a recipe.

Zillow emerged from the 2021 failure of its volatile business buying and selling homes with a new plan: build a “housing super app” offering a range of housing services to buyers, sellers, renters, and agents in one place.

It hasn’t been a smooth ride. Zillow stock is down 5% this year, and 65%  below its pandemic high-water mark. But its push to integrate mortgages— whether through a mortgage marketplace or a lending arm of its own—into the buyer experience, along with investments in rentals and tools for agents, is finally paying off.

Zillow expects to be profitable under generally accepted accounting principles in 2025 for the first time since 2012. “The silver lining of a bad macro is it forces you to really be crisp about what’s working and what’s not working,” says Zillow CEO Jeremy Wacksman.

In the company’s super-app future, the homebuying transaction will never leave the company’s orbit. The whole process—shopping, hiring and communicating with an agent, talking to a loan officer, making an offer, getting a mortgage, and closing—will happen “in the palm of your hand inside an app like Zillow,”Wacksman says.

Across the spectrum, big players in real estate are envisioning what a less fractured housing transaction looks like. Buyers shopping with a Compass agent now have access to a dashboard to keep track of their communication, forms, to-dos, and referrals.

Realtor.com—a home-listings portal run by Move, which, like Barron’s, is owned by News Corp—sees an opportunity “to create an open marketplace, not just for real estate services, but for mortgage services and more,” says Move CEO Damian Eales. “This part of our business will evolve quite significantly in coming years.”

The Consumer

Mega-companies come with both opportunities and risks for consumers. Rocket, Zillow, and others see the opportunity to cut down on friction for buyers and sellers by uniting disparate parts of the housing ecosystem. “The more integrated the experience is, the easier it is to actually lower costs, and then pass on savings to the person who matters most, which is the consumer,” says Rocket’s Krishna.

That isn’t the way some left-leaning politicians see it. In a letter to the Department of Justice and the Federal Trade Commission, five senators including Elizabeth Warren (D., Mass.) and Bernie Sanders (I., Vt.) said that Rocket’s Redfin and Mr. Cooper deals “may reduce choice and raise prices for American families in the housing market” at a time when costs are already high.

“I couldn’t disagree more,” says Rocket’s Krishna.

No matter how a buyer purchases a home, it pays to consider the competition. Freddie Mac in 2023 said that borrowers who compared quotes from at least four mortgage companies stood to save as much as $1,200 a year compared with those who only sought one offer. “Sometimes the way these platforms work is they basically exploit impatient consumers,” says Columbia’s Van Nieuwerburgh. “It’s nice and it’s convenient, and they basically end up overpaying for that convenience.”

But bigger companies could also cut costs, particularly when it comes to home-building, says Van Nieuwerburgh. “There’s a huge number of very small construction firms that are frankly very inefficient,” he says. Deregulation efforts “could potentially lead to some much-needed consolidation,” resulting in more homes getting built—and more options for buyers.

As companies converge on similar visions of the user experience, they diverge on how it will be structured. Take private listings, for example: Advocates like Compass say sellers should be able to test the market before listing to the whole world, while critics like Zillow and eXp say such networks disadvantage buyers. The debate has split the industry down the middle, and is already changing the homebuying process. While Compass encourages sellers to list privately first, Zillow and Redfin have banned listings that aren’t immediately syndicated.

The industry’s evolution won’t stop with consolidation. “You finally have industry participants…all rethinking how things should work and criticizing existing processes that have been an afterthought for the past century,” says KBW analyst Ryan Tomasello.

Source: Barron's