There is a notable shortage in appropriate property for elderly home owners looking to downsize, according to recent reports.
The supply shortage isn’t exactly news, as we’ve been reporting on a lack of suitable properties coming to market for some time now, but this indicates that the lack of suitable properties at the bottom is actually causing the higher end of the market to stagnate as well.
According to a study from financial specialist Key Retirement, more than 1.4 million people are looking to downsize their properties in order to release equity for retirement, but are struggling to find anything suitable for their needs.
As the government Help to Buy scheme continues to encourage new buyers to seek new build houses, it is leaving a black hole in the middle of the market where homeowners looking to scale up are unable to due to lack of supply, and the same is true for those looking to downsize.
The study also noted that across the country more than 620,000 homeowners over the age of 65 say they have looked into downsizing but cannot find a suitable home in their area, while another 500,000 say they’ve considered moving but would not be much better off financially.
Around 11% of over 65s questioned say they have already downsized, with pensioners in the North West and South East the most likely to have already made the move to a more suitable house at 13%.
Some recent coverage has had a somewhat accusatory tone towards retirees for holding up property at the top of the chain, but this research vindicates them in the sense that it makes little sense for them to do so financially, and that the properties simply aren’t available.
Overall demand for property has barely fallen, but the available property coming to market has noticeably dropped in that time. Prices around the South and South East have suffered quite badly, but prices in the North have largely seen healthy increases.
For investors and landlords the North and Midlands are representing the best value for money and opportunities for long term growth, whilst home owners are also looking to the same areas for similar reasons.
Dean Mirfin, chief product officer at Key Retirement, said: “Downsizing should make financial sense for older homeowners as it releases money to pay for retirement and it also should make sense for the property market as a whole as it frees up bigger houses, but despite the numbers of older home owners wanting to downsize it is clear they face problems in finding suitable homes for retirement and for many the finances just don’t add up. Unfortunately, that leaves them struggling to maintain homes, and in many cases, struggling financially, pensioners are sitting on property wealth of more than £1 trillion which could significantly improve their standard of living in retirement and helping them make the best use of that money would boost their finances and the economy as a whole.”
What we’ll need to see moving forward is a more innovative way of helping both the middle and top end of the market to release good quality property to the market without people fearing they will be unable to find a suitable replacement.
Being able to bring these homeowners back in to activity in the market will be key to the future of a healthy property market.
Are you an over 65 looking to rent? Why not have a look at our available homes today and give us a call.