We really don’t want this homeownership gap to grow any bigger.
Tony Ward is chief executive of Clayton Euro Risk
I was pleased to see the comment made by Bob Pannell, chief economist at the Council of Mortgage Lenders, this week.
In his blog, he lamented the state of the UK housing market, suggesting that it suffered from long-term structural problems, which cannot be solved by building new homes alone. He described the market as ‘dysfunctional’ and beset by issues that are ‘difficult to address’.
Part of the problem he identified is the sheer scale of the demographic changes taking place, which simultaneously boosts demand for housing while constricting supply.
One of the key factors identified by Mr Pannell is that we have an ‘ageing population which holds disproportionately large amount of housing assets’. Older people, he argues, are more likely to under-occupy property and to be reluctant or unable to move to more suitable homes.
This is an urgent issue, which I identified in my blog back in June, referring then to a survey by Legal & General identifying a shortage of housing suitable for older people in Britain. The statistics speak for themselves: homeowners stuck in properties worth £820bn, leaving 7.7m bedrooms empty. This research suggests that almost a third of homeowners aged over-55 have considered downsizing in the past five years yet only 7% have actually made the move. Just 2% of the country’s housing stock is designed with pensioners in mind.
The L&G study claimed that if all 3.3m over-55s looking to downsize could find suitable homes, this would unlock 18% of the country’s property market, worth £820bn.
I think the argument I made then is worth repeating: the issue we’re facing is not simply a lack of housing stock, it’s a lack of the right type of housing. We need intelligent planning that takes the changing nature of households into account.
We should do so much more to make the prospect of downsizing a realistic and cost effective option for over-55s. Giving more thought to the type of housing we are building so that it will be attractive to older people is also sensible. Perhaps the CML’s views will have some clout. Mr Pannell calls on the government to stimulate activity, suggesting that reforming areas such as property tax would help. After all, first-time buyers are getting help from various government schemes and incentives. Perhaps we need to think of ways of helping the older generation, too. They could help unlock the key to increasing valuable housing stock.
Bob Pannell suggests that homeownership is becoming increasingly polarised – by such parameters as age and the tenure of parents. We really don’t want this gap to grow any bigger
