The retirement property market will need to drastically change to meet the demand of the generation entering or approaching retirement, which will have vastly different needs and on average much less property wealth.
Currently the later living property market is directed at the largest and most affluent group of people, the 2.9 million people over 65 who have property wealth of more than £300,000. But the latest analysis from our Development Economics team (as reported in the Daily Telegraph) shows that the fastest growing portion of the retirement market is at the opposite end of the property wealth scale, where assets are expected to be at around £163,000 by the time they hit retirement. Over the next 20 years, this group will increase tenfold, the equivalent to 4.5 million people aged between 45 and 65 entering the market with half the wealth of current retirees.
In addition, this fastest growing demographic group live in a wider variety of areas of the UK and have different lifestyles and expectations. On average they live in suburban areas, predominantly in the Midlands and North West, in contrast to the biggest portion of the market currently, which is concentrated in rural areas and in the South East.
This changing profile of the later living population poses a challenge and also a opportunity for the market. To effectively meet future demands for later living homes, the market will need to shift to offer retirement products that are more affordable, that provide easy access to services and amenities akin to suburban living, and in a wider range of areas as needs change.
Partner, Kathryn Ventham explains: “The market needs to shift now to ensure that we are planning and building future later living properties that reflect the needs and expectations of the next generation of retirees with much lower property wealth than current retirees. Supply needs to meet demand to allow the emerging retirement population to ‘right-size’.
“This will not only provide the later living homes that are needed but also open up larger, family-sized properties to the market.
“To achieve this, there is a need for a more coordinated and thought-out approach to delivering homes that the older population want and can afford in the coming decades. The market for high-end retirement homes will remain and continue but is going to become a smaller slice of the pie. There is a real opportunity here for encouraging new entrants and a diversification of the market to provide new and more affordable homes to cater for the fastest-growing demographic, which will be less affluent in old age.”
Click the image above to read the full report.
This report follows our contribution to the Future of London's report into the challenge of housing older people in London – Ageing Cities and is our second 'Later Living' report.
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Later Living, ageing population, Development Economics