Two weeks ago I wrote about a very upmarket retirement housing project in London. Only very wealthy people need apply because it was a money-no-object solution for downsizers with pots of gold at the end of their rainbow time working and living in London.
Now I want to look more widely at the rapidly emerging market of private providers of retirement housing, all looking to tap into the £1.3 trillion equity that older people have locked up in their family homes. The “downsizers” also more recently referred to as “rightsizers”.
The market is being driven by three key factors:-
- The changing demographics of the older population. 23% of the UK population is now over 60 and as more of the baby boomer generation retire, the proportion will increase to 29% in the next 20 years. They more then previous generations have accumulated wealth through the over-inflated growth in house values in the latter half of the last century.
- The lack of retirement housing options. Only 2% of the existing housing stock is made up of specialist housing for retired people, leaving aside the ever-unattractive option of last resort – residential care. Historically, most newly built retirement housing has been provided for rent either by Local Authority’s or Housing Associations. There has been some limited provision of home ownership by both Housing Associations and private developers, almost exclusively built on the 1960 model of sheltered housing. It is a model that has lasted well but is now looking tired.
- The prospect of loneliness / isolation and frailty. This is the least understood elephant-in-the-room issue that few people want to face. The newly retired live in hope that it will never happen to them, so they hang to what they have got. For the majority in the early years of retirement they can happily continue to turn a blind eye to the future.
The demographics should be a major driver for transforming this sector of the housing market and it is for the lucky few who have sufficient funds to buy into the luxury end of the market or are fortunate to live near recent new build options in the social housing sector.
Sadly the other two factors are more of a drag than a driver for most people who could be players in the market.
I’ll look at some of the current options in the weeks ahead.