Shortage of retirement housing “at crisis point”
The shortage of retirement housing in the UK has reached a “crisis point”, according to new research.
A report from global property firm JLL suggests that provision for 14.3 million over 65s is ‘missing without action’. By 2025, the firm estimates 725,000 housing-with-care units (24 hour assisted care) are “desperately needed” to meet demand from the ageing Baby Boomer generation. Many of these retirees want to live in specialised housing, and they have the cash to afford it with over 65s currently holding £800 billion in housing equity.
The undersupply is mainly in the mid and high end areas of the market while the affordable markets have 10 times the units per person in comparison.
Antony Oldfield - Director, Healthcare at JLL says “There are two main retirement housing options in the UK, Housing with Support and Housing with Care. The former became popular in the 1980s, whilst the latter is now the fastest growing part of retirement housing and better suited to the long-term care needs of retirees. This generation has benefited from unprecedented house price growth. To put it in context, if they bought their house in 1970, it has now risen in value by 4,300%. If applied the equivalent value of growth in to a loaf of bread, which in 1970 cost 9p today would cost almost £4. So, not only do they have the spending power they also desire high quality housing options making the need for investment stronger.”
The report highlights that the vast majority over 65s are not frail enough to require a care home but many will need more support than conventional housing - this group will hit 3 million by 2025. Meanwhile, 2.6 million homes would return to the private housing market if building retirement accommodation for this group becomes a priority.
As well as the knock-on effects for UK supply, Nick Sanderson, CEO, Audley Retirement Villages, points out the importance of the housing for elderly quality of life.
“Recent research by the ILC has already identified that residential housing with flexible care provision (extra care) can have a huge impact in promoting owners’ quality of life and reducing feelings of loneliness and isolation,” explains Sanderson. “With the average person in a retirement village experiencing half the amount of loneliness than those in the community.”
“Currently, the Government simply isn’t doing enough to promote these types of developments,” he agrees. “Retirement properties currently make-up just 1% of the UK housing stock. House builders and Government alike remain obsessed with first time buyers while ignoring over 55s. It won’t be until we shift our focus to the older generation that real progress can be made.”
Recognising this shortfall, the Government has put housing at the heart of its Care Act 2015. The Act will force Local Authorities to encourage a variety of different types of services to shape the market, not just at the lower end, which has been their focus historically.
The issue is not just restricted to the UK, though, as populations continue to age across the globe. In the US, builders are confident in the single-family 55+ housing market, as efforts are made on both sides of the Atlantic to boost supply.
All three components of the NAHB’s 55+ single-family index posted increases from the previous quarter: present sales increased three points to 65, expected sales for the next six months rose one point to 67 and traffic of prospective buyers increased three points to 46.
“Like the overall housing market, we continue to see steady, positive growth in the 55+ market,” says NAHB Chief Economist David Crowe. “With the economy and job growth continuing to improve gradually, many consumers are now able to sell their current homes at a suitable price, enabling them to buy or rent in a 55+ community.”