While the lack of affordable new homes for first time buyers often makes the headlines, at the other end of the market there is a similar crisis which gets far less publicity. Yet solving the problems for this older demographic could, in turn, have a major impact on the number of homes available throughout the housing ladder.
The statistics behind the retirement housing crisis are stark. According to the Office for National Statistics (ONS), there were 11.8m people in the UK over the age of 65 in 2016, accounting for around 18 per cent of the population. Yet data from both the New Policy Institute and the Elderly Accommodation Counsel (EAC) indicates that there are as few as 725,000 homes within the retirement sector, just 2.6 per cent of the overall housing stock.
What’s more, things are only going to get worse. According to the ONS, the percentage of the population over 65 will rise to 20.5 per cent by 2026 and almost 24 per cent by 2036, with the numbers in this group rising three times faster than the general population.
Clearly this represents a huge market for developers. A report by McCarthy & Stone, from 2017, estimates that 29 per cent of the retirement market have equity of £250,000 to £500,000, and 38 per cent of these are considering downsizing. That’s a target market of 1.3m people, yet the EAC estimates that just 158,000 retirement homes were built in the last year.
These homebuyers have the money, and many have the mind to move. Knight Frank research estimates that 25 per cent of retirees would consider downsizing as an option, creating a demand for over 580,000 new retirement units over the next decade. The JLL report, Retirement Living, estimates that 80 per cent of retirees will be mid to high affluence if you include the value of their property, while the Knight Frank report suggests that as many as 3.5million households could afford to sell their current home and buy a retirement flat in their local area, while still retaining 25 per cent of the equity of their home to fund their retirement.
Of course, as Mark Davis discussed on Housebuilder and Developer last May, there are marketing and motivational issues to be overcome, especially when persuading people to leave a longstanding family home. Yet with the opportunity to move to a more manageable home, and even try a bit of SKIing (spending the kids inheritance) into the bargain, these objections can easily be overcome.
The benefits of getting this market moving are huge, not only for the developers and the retirees concerned, but also for the wider housing market and even the community as a whole. The Royal Institute for Chartered Surveyors estimates that ‘empty nesters’ moving on to retirement villages, flats and other specialist accommodation, could free up as many as 3.5million much needed family homes for people who really need those extra bedrooms.
Tom Scaife, from Knight Frank, goes even further, suggesting that older people moving into homes with more support and care available on site could take the strain off the NHS and potentially save billions of pounds in the process.
The UK is far behind the likes of Australia, New Zealand and the United States in providing high quality, purpose-built retirement accommodation. If we don’t catch up fast, we risk creating a huge crisis, not only for the retirement market itself, but across the whole spectrum of housing and beyond.
Written by Kelvin Elliott, Purchasing Director at Yes Homebuyers