The notion that older people are blocking the housing market for younger people by sitting in family homes they no longer need is perplexing. Family homes are not what young people want so where’s the problem? Or is it that if they moved out everyone on the ladder could step up a rung and then there’d be room for those starting out?
Whatever the argument, a new report from Saga suggests that actually older people may be actually competing for smaller homes in an unexpected way.
More older people are renting
The survey finds that a third of over 50s are currently living in rented accommodation. That’s up from 25% in 2011. Saga reports that the biggest increase in renters is in the 50-54 age group, and that 20% of renters over 50 are single. And Saga thinks many of them are waiting to get back onto the bottom rung of the housing market.
Why’s that happening? The rise in “silver splitters” is a likely cause. As people live longer they’re continuing to evaluate their happiness into their retirement years and divorce is a more common option. That involves selling the family home and splitting the assets. One family home doesn’t necessarily equate to two smaller properties in the same area, so people are taking their time to decide where and how they are going to invest again, if they can.
Downsizing on a single income
Moving into specially built retirement apartments or villages may not be an option. While these properties range in price dramatically depending on the provider, facilities and location, they are generally not cheap. One apartment could easily eat up the value of an entire family home.
Moving away to save money
Moving to a different part of the country is also often mooted as the answer to unlocking the value of assets. But anyone hoping for a pretty cottage in the Cotswolds or a charming cathedral town will be disappointed, as these have become destinations of choice for retirees. And even last week there was a surge of searches around moving to Scotland, as shocked pro-EU voters wondered if Scotland might leave the UK and rejoin the EU in the next few years.
Competing in the first-home market
All this suggests then that it’s in the small home market that older people may be competing with first-time buyers. If that’s the case, then calling retirees out for holding up the property market by staying in the large family home is a tad unfair.