Changing trends in housing tenure highlight the need to provide age-appropriate housing options
Understanding how older people live their lives currently and how this may change in the future is important for understanding the implications of an ageing population may have the housing market.
3 minutes to read
The UK’s population is ageing and is projected to continue to age. Amid all of this change, the need to provide suitable housing options for these individuals is more important than ever.
Accordingly, the UK later living market is undergoing rapid growth, underpinned by demographic shifts that are increasing demand for a wider array of specialist housing to suit the changing needs of older purchasers.
"When considering how to deliver this housing, the preferences and requirements of potential residents must be paramount, so the most attractive forms of age-appropriate housing can be delivered"
_Tom Scaife, Head of Senior Living, Knight Frank,
The number of people aged 65+ living in the UK is forecast to increase by 20% to 12 million by 2027. Advancements in healthcare mean individuals are living longer, and more healthily. Indeed, the cohort of 90+ year olds in the UK is expected to rise at an even faster rate, by a third, to more than 750,000 people over the next eight years.
Data released today (10/02/2019) by the Office for National Statistics (ONS) shows that in 2017 almost three-quarters (74%) of people aged 65 years and over in England own their homes outright, up from 56% in 1993. Only 6% of people aged 65 years and over rent privately today, though the ONS notes that this is likely to increase in the future if people who are currently in their 30s, 40s and 50s in the private rental sector remain so into older ages.
The need, therefore, to provide age appropriate housing to this cohort is only set to grow, according to Lauren Harwood, Head of Senior Living Research at Knight Frank. "With more than 4,000 existing senior living private rental units across the UK, and a pipeline of senior Build to Rent (BTR) schemes set to be delivered over the next few years, it is evident that senior living operators are responding to these demographic shifts by providing seniors with a choice of tenure options."
Tom Scaife, Head of Senior Living at Knight Frank, said: “Changing demographics and trends in housing tenure are having profound implications on the property market. The UK’s population is ageing at a faster rate than ever before and the ‘grey pound’ is becoming increasingly influential. In response, the need for age appropriate housing has grown significantly. Ranging from standard housing through to aged care facilities, the offering of senior’s accommodation has evolved markedly over the past decade, but when considering how to deliver this housing, the preferences and requirements of potential residents must be paramount, so the most attractive forms of age-appropriate housing can be delivered.”
The demographic shifts also have also spurred growth in alternative financing available to older homeowners. The three quarters of 65+ homeowners are increasingly opting for equity release products, whether that be for the purposes of inheritance tax planning, covering the cost of care, gifting funds to children or grandchildren, or simply to top-up income, according to David Forsdyke, head of later life finance at Knight Frank Finance.
Older homeowners withdrew £3.92 billion of housing equity during 2019, a four-fold increase on the £946 million taken out a decade earlier, according to Equity Release Council data.
Over the past couple of years, financial investment in the senior living sector has also grown, and Knight Frank forecasts this will continue with the total value of the private senior living market reaching £55.2 billion by 2023, from £39.6 billion in 2019.
As well as increased investment - from both the UK and overseas - advances in senior living design, scale, tenure options and healthcare choices are helping to move the sector forward, though challenges remain.
A uniform plan for meeting the housing needs of our aging population is required, and should include clarity on affordable housing, local authority financial savings through provision of care within seniors housing, and the release of local family housing back to the market via downsizers moving into seniors housing.
Knight Frank's latest research into the sector can be found here. For more information contact Tom Scaife, Head of Senior Living, or Lauren Harwood, Head of Senior Living Research Consultancy. To discuss borrowing options contact David Forsdyke at Knight Frank Finance.