I found an interesting article entitled "The Bank of England adds some dynamite to the war of the generations" through a link on the FT Alphaville blog. This in turn references a post on the Bank Underground blog on the dynamics of debt back in the UK. OK, that's a bit of reading. But the basic argument is that they've got proof that higher property values are being paid for through rising debt levels on the young. For example, this chart shows borrowings versus age. OK, the thesis strikes me as being bleeding obvious, after all, someone has to fun the equity fairy. But the above demonstrates that those born in the seventies or eighties are ramping up debt at a relatively faster rate than those in born in the sixties or before. Hence it's the oft-discussed generational transfer of wealth. I think that they're missing a second factor, which is investors. They're a pretty major factor in a lot of markets these days. It'd be interesting for the Bank of England to rework the figures with them included. I don't know how relevant it'd be to Australia, as property investment seems more mainstream here, but it might give a hint of the dynamics.