In Colchester OAPs (people aged over 65 for the purposes of this article) currently hold more housing wealth in their homes than the annual GDP for the entire town of nearby Southend on Sea – which is a problem that affects us all.
Many retiree’s want to move but cannot because there’s a shortage of suitable homes for mature people to downsize into. Because of the shortage bungalows command a 10% to 20% premium per square foot over houses of the same size with stairs. The shortage isn’t going to ease anytime soon, in 2014 just 1% of new builds in the UK were bungalows, according to the National House Building Council compared with 7% in 1996.
According to my research there are 11,344 households in Colchester owned outright (i.e. no mortgage) by Colchester OAPs. Taking into account the average value of a property in Colchester around £3.62 billion of equity is locked up in Colchester OAPs homes. Compare that to the GDP for the whole of nearby Southend on Sea at £2.87 billion gives you an idea of the scale of the problem.
A recent YouGov survey found 36% of people aged over 65 in the UK are looking to downsize to a smaller home. As far as I am aware there are no initiatives to address the chronic under-supply of appropriate retirement housing for Colchester’s rapidly ageing population. The Government seems to be focused on initiatives, like Starter Homes, designed to help younger people move from renting to buy their first property and become homeowners. It’s a good initiative but it won’t help solve the longer term problem of the seismic shift in demographics in Colchester.
Colchester OAPs, who find it difficult to continue to live on their own, cannot move out of their bungalows because of the lack of sheltered housing and ‘affordable’ care home places to move into. This means older retirees are stuck in their bungalows, younger retirees can’t downsize from their family homes into bungalows leaving less family homes for younger people to buy. It reminds me of the bed-blocking problem in hospitals.
Sadly, the problem is only going to get worse because, in the 50 to 64 year old homeownership age range, there are an additional 7,573 mortgage free Colchester households with a further 7,301 Colchester households due to pay off their mortgages shortly. With Government projections showing the proportion of over 65’s rising by over a third from the current 17.7% to 24.3% of the population over the next 20 years pressure on the Colchester Property market will inevitably increase.
One of the main reasons house prices have steadily climbed over the last 40 years because the supply of properties hasn’t kept up with demand. With more people living longer, higher divorce rates (meaning one family becomes two) and migration we need, as a Country, 240,000 properties to be built every year to just stand still. In the 1990’s and early 2000’s we built, as a country, between 180,000 to 190,000 households a year. Since the Credit Crunch in 2009 that total has dropped down to between 130,000 and 145,000 households a year – clearly nowhere near enough to solve the shortfall.
As a country we really need to release more land for starter homes, bungalows and sheltered accommodation. Land prices are killing the housing market with the large construction companies focusing on building traditional houses and apartments. In my opinion, until the Government changes the planning rules and allows more land to be built on, Bungalows will be remain the most attractive property investment as they will surely continue to attract ever growing premiums.
If you’re one of the Colchester OAPs looking to buy, move, or invest in properties in Colchester feel free to send me a link to the property on Rightmove or Zoopla and I’d be happy to give you my opinion and undertake free pre-purchase visits to your shortlist of potential properties to provide a valuation. Give me a ring on 01206 862288 to discuss any aspect of the Colchester property market. Alternatively email firstname.lastname@example.org or add your comments below.