For the past decade they have been portrayed as a generation without hope. However, the future for millennials — for so long pilloried by their elders as the “avocado generation” who can’t afford to buy homes and so fritter away money on takeaway coffees — looks decidedly brighter.
A new report said a “massive transfer of wealth and assets” in the next two decades will finally propel millennials, who are defined as being born roughly between 1980 and 1994, from being the have-nots into the “richest generation in history”.
This huge transfer will occur as wealth is passed after death from the last of the property-equity-rich generations: the silent generation (born from 1925 to 1945), the baby boomers (1946-1964), and the oldest cohort of Generation X (1965-1979), who between them have more than £2.5 trillion tied up in their homes. In some cases, it will mean many millennials finally realising the dream of home ownership at about the time they themselves retire.
Liam Bailey, global head of research at the estate agency Knight Frank, whose annual Wealth Report is published on Wednesday, described the ramifications of this forthcoming transfer between the generations as “enormous”.
He said placing huge wealth in the millennial generation’s hands, and that of Generation Z beneath them, will have a profound impact on how our society runs. This will result in people buying different homes (greener) to the type of goods purchased (more environmentally friendly) and their investment choices (more sustainable), given their differing priorities and attitudes in how they spend their money — with millennials far more focused on the environment and sustainability than baby boomers.
“The implications for investment managers and financial advisers, or for anyone else working with these new cohorts that will become wealthier, will be quite significant,” he said. The size of this intergenerational wealth handover will be eye-watering in its scale. An analysis by Savills last year found that over-65s have £2.588 trillion in equity tied up in property — £2.183 trillion in residential properties and £405 billion in rental — and only £147 billion in mortgage debt.
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By contrast, at the moment, those aged 35 to 49 have £1.058 trillion of property equity and £676 billion of debt — and the under-35s, made up of millennials and Generation Z beneath it, have £306 billion of equity, but £317 billion of debt.
However, with millions of baby boomers still alive and healthy, there is evidence the property market is being propped up by living intergenerational transfers — a process often referred to colloquially as the Bank of Mum and Dad.
Last year 61 per cent of first-time buyers only got onto the property ladder thanks to financial help from living baby boomer parents, according to new figures from Savills — up from 46 per cent only a year earlier and an all-time record. This works out as a total of 173,000 buyers funded in part by their living parents in 2023, who gained a combined total of £10.6 billion in help — up from £8.9 billion in 2022. In some areas, particularly in the southeast, the average property remains more than ten times the average income.
Knight Frank’s report also analysed the position of the most expensive property markets and the wealth of those who live there. It found prices in the world’s “prime” markets — defined as the top 5 per cent most expensive properties in each country — had risen the fastest in the developing world. Manila (26.3 per cent) and the Bahamas (15 per cent) are leading the way, while prices in London’s most expensive slice of the market fell 2.1 per cent, Edinburgh dipped by 3.2 per cent and Oxford 8.4 per cent — in part because of the mortgage crisis leading to a correction in previously expensive real estate prices.
Meanwhile, the number of ultra-high net worth individuals (individuals or families with a net worth exceeding $30 million) rose globally by 4.2 per cent in 2023, from 601,300 to 626,619. Emerging economies also took centre stage here, with Turkey having a 9.7 per cent rise of super-wealthy off the back of major industrial expansion.
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However, numerically by far the most significant growth was a 7.9 per cent expansion of the super-rich in the US, from 208,560 to 225,077 thanks to the robust performance of the US economy, a sharp rise in equity markets and the AI technology boom. There was a far more muted growth of ultra-high net worth individuals in the UK by 3.1 per cent, from 22,379 in 2022 to 23,072 last year — an increase of 693 people. “A combination of taxation and political rhetoric have prompted some investors to wonder whether they are still welcome,” warned Patrick Gower, a wealth report researcher.
Art was the most lucrative investment class, with prices rising 11 per cent in 2023 — the second year in a row it has topped the charts.
Jewellery (8 per cent); watches (5 per cent); coins (4 per cent) and colour diamonds (2 per cent) were next. Despite a year of record-breaking luxury sales, the overall index of ten luxury items fell in value by 1 per cent, with notable falls in the value of luxury and antique furniture (-2 per cent), handbags (-4 per cent), classic cars (-6 per cent) and whisky (-9 per cent).
