More investment and development of retirement properties is needed in order to meet the growing demand from over-55s to live in this sort of housing, a new report from Knight Frank has claimed.
Speaking in the Retirement Housing 2014 report, Knight Frank’s head of UK residential research Gráinne Gilmore said that more than a quarter of people over the age of 55 would like to live in retirement homes, adding that the current pace of development is not enough to keep up with demand.
And with this figure amounting to potentially 4.4 million people looking for retirement housing, and the projections suggesting that this type of housing will only account for three per cent of all new homes in the next few years, it’s clear that the UK needs more investment in this increasingly popular asset.
According to Knight Frank, the aging UK population could potentially create ‘a new housing crisis’ in the next few years, with the number of people aged 65 or over likely to account for some 23 per cent of the UK population by the year 2034. This is compared to 17 per cent now, and just five per cent at the start of last century.
And while longevity of life can bring about additional opportunities for older Brits, Knight Frank said that it also provides the country with additional challenges, not least of which involves addressing the shortage of homes that could be available for this age group.
People are not only getting older, of course, but they’re also becoming far healthier in later life than they may have been in times gone by. This means there is less of a need for the traditional retirement home and more demand for new independent properties that also offer access to support, care and amenities all within one community.
When asked what would make the ideal retirement village, British respondents said that the things they would most like to see included self-contained properties (67 per cent), access to garden space (86 per cent), access to extra care (65 per cent), a cafe (61 per cent) and communal meeting areas (56 per cent).
Demand for new specialist homes is clearly there, according to Knight Frank, but the UK still lags behind in terms of provision. Of those aged over 60 in the UK at current, only one per cent are living in retirement homes. This is compared to some 13 per cent in New Zealand and Australia and 17 per cent in the US.
And even within the breadth of properties that the country does have to offer older residents, there are still issues that need to be addressed.
For example, while 2012 saw 2.3 per cent of all housing stock (around half a million homes) in the retirement sector, only 106,000 of these (less than half) were available for home ownership, while the rest were only rental properties.
Given the sheer number of people in older age groups looking to downsize in their retirement – MGM Advantage reported that some 12 per cent of retirement-age Brits want to sell and move somewhere smaller – it seems counter intuitive for the retirement property sector to not be making the most of this collective wealth.
Even when looking at the future, it’s unlikely that it’s a reality that will change any time soon. According to Knight Frank, only one per cent of all private sector housing currently in construction across the country is retirement specific.
Emma Cleugh, head of institutional consultancy for Knight Frank, believes that government intervention is needed for funding and planning in this specialist sector in order to pique the interests of investors and bring more specific retirement homes to market.
“The government should be urged to support far more progressively the needs of older people in terms of high quality housing, care and an aspirational lifestyle,” she said.
“Support put in place for the delivery of housing for older generations through the planning system and funding structures will boost confidence among investors, translating into increased activity from developers and operators. This will stimulate the supply of appropriate housing across the country on the scale in which it is urgently needed.”
Ms Cleugh went on to add that it is vital that retirement housing becomes less of a niche and more of a mainstream asset as soon as possible.
Any increase in retirement housing is also likely to improve the property market across the UK as a whole, Knight Frank believes. It said that of the homes where the main occupier is aged over 55, 52 per cent are under-occupied. Were these people able to move to appropriate retirement accommodation, it would free up properties that could potentially help address the mainstream supply and demand issue.
That’s not to mention the impact that it could also have on first-time buyers. At the moment, older people downsizing can often block the path of first-time buyers trying to get onto the property ladder, since both demographics are looking at the same one and two-bedroom homes. Extra retirement development could help eradicate this problem.