Retirement housing supply in the UK way below potential demand, says new analysis
A quarter of home owners in the UK aged 55 and over would consider downsizing or moving into some sort of retirement accommodation, according to new research.
However the supply of retirement housing in particular is well below potential demand at a time when the number of people aged over 65 is set to almost double in the next 10 years, says the analysis report from real estate firm Knight Frank.
It has worked out that if 25% of people over 65 opt for retirement housing over the next decade, there is a potential demand for this type of housing from an additional 582,283 individuals.
The researchers conducted a modelling exercise to establish the number of households for which a move in retirement might be financially viable. An analysis of property wealth distribution in the over 65’s found that housing wealth varies by region. London and the South and East have a higher proportion of their population living in high value properties compared to the rest of the country.
Overall, some 2.2 million over 65 households, 46% of the total, live in a property with an average value of up to £250,000 while 1.9 million, some 38% of the total, live in a property with a value between £250,000 and £500,00 and 812,000 households, 16% of the total, live in housing worth more than £500,000.
The research looked at the current housing equity of the over 65 population in owner occupied housing, assuming outright ownership, and compared this to the cost of buying a flat in the same locality.
The analysts were able to establish how many households could make this move whilst retaining at least 25% of the equity from the sale of their original home for themselves. It found that 3.5 million households can downsize to a local flat using this criteria.
The highest percentages are in the South East and East Midlands where 78% of households fit the criteria. This is followed by the South West, East Midlands and the South West where three in four households could downsize with at least 25% equity to spare. Those who do not fit this criteria could usually afford to move, but without a comfortable cash cushion equal to a quarter of the value of their home.
According to Tom Scaife, head of retirement housing at Knight Frank, the forecast growth in the UK’s older population coupled with a need for housing that can free up family homes and help alleviate the stress on the NHS and social services means that the case for retirement housing delivered at scale has never been stronger.
‘In its basic form, retirement housing can help reduce loneliness, is a safer environment in a community setting and reduces visits to hospital. The scenario of falling down the stairs at home, commencing a cycle of increased frequency and length of stay in hospital and, finally, the need to go into a care home could be negated. Well-designed housing with care nearby reduces the likelihood of an event, such as a fall, and also enables much faster reaction times should such an event occur, resulting in better outcomes,’ he explained.
He pointed out that a recent study by the Strategic Society Centre suggested that an increase in specialist retirement housing will lead to significant savings for the NHS and the state. If one couple for every 50 older home owners moved into a new unit of specialist retirement housing for at least 10 years, this would yield savings in the long term of £14.5 billion across the country, it found.
‘With one million people aged 85 or over visiting A&E every year, and the over 65’s accounting for four fifths of hospital stays of less than two weeks it is time that retirement housing is seriously considered as a way to reduce pressures on local services and as a part of the solution to the nation’s social care problem,’ Scaife said.
‘With increased awareness of the benefits of retirement housing, clarity at the development planning stage, and some much needed incentives retirement housing can be delivered at scale and help to tackle the social care and the housing crisis in one go,’ he added.