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Last Updated: Wednesday, 24 March, 2004, 03:33 GMT
House price fall as population ages?
Property prices could fall as the UK population gets older and the birth rate drops over the next 20 years, warns government pensions adviser Adair Turner.

Adair Turner
Don't assume property will finance your retirement, says Mr Turner

Home-owners who have assumed that bricks and mortar make for a safer way of investing money and financing retirement than, say, regular pension schemes could be in for a nasty shock.

While traditionally seen as a solid investment Adair Turner, who chairs the Pension Commission set up by the government to investigate pensions and long-term savings in the UK, warns the property boom could come to an end.

"There is at least a possibility that there will be a period where house prices will fall, or certainly not go up in the way that they have in the past," says Mr Turner.

The reason, he says, is that the ageing population and falling birth rate will mean the demand for housing in the future will be lower.

Delayed retirement?

"One reason why house prices have been going up and up is that we have had a large number of people in the baby boomer generation trying to buy houses.

"Now if the next generation is significantly smaller than the present generation, then that generation will be trying to sell those houses to a smaller next generation."

Will people be working into their 70s and 80s in the future?
Adair Turner makes his predictions in "If...the Generations Fall Out", the third of BBC Two's series of drama documentaries looking at possible future scenarios.

In the programme's fictional scenario, set in 2024, many older people are forced to work into their seventies and eighties because they have failed to make adequate provision for their retirement and have misjudged the property market.

"Housing assets are very large, but I think we have to be a little bit careful of assuming that people can use them as sources of income in retirement." said Adair Turner.

Mr Turner also warns that falling birth rates will further impact on the UK pensions crisis in the near future.

"Twentieth century pension systems and the generosity of them were vitally dependent on there being many more workers than there were retirees."

He told the programme: "They were... like pyramid schemes, they were like chain letters. They only worked with that level of generosity because each new generation is larger than the one before... and the problem is that the pyramid is coming to an end."

If...the Generations Fall Out was broadcast in the UK on BBC Two on Wednesday, 24 March, 2004.


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