It should be noted though, that it's perfectly possible for elderly people to be living in houses worth well over half a million pounds without it being particularly large or out of the ordinary, in many parts of south-east England. In which case, you're not necessarily talking about people simply downsizing from a two-bedroom home to something smaller, you need people to move out of premium locations. Someone who has lived in a terraced house in central Oxford or Cambridge all of their lives and has the ability to walk to friends & family, longstanding relationship with GP, local shops where they are known etc. might find it quite hard to move a couple of miles into the suburbs, because the area around them has gentrified in the last couple of decades.
In any case, it seems unlikely that if we do get a wealth tax, it would take into account the value of pensions or primary personal residence. What voters want is a wealth tax that *other people* have to pay. So I don't think it should be a serious consideration when working out a target FIRE amount. (And frankly, those of us who have RE'd with large sums sheltered in ISAs and pensions pay hardly any tax as it is, so can hardly complain.)
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