How wealth is distributed will always be a contentious
issue, especially as the Baby Boomers (those aged between their late 50’s and
late 70’s) wealth has grown exponentially over the last 20 years, compared to
the wealth of the younger generation.
With most UK property in the hands of the older
generation, with its total value about to smash through the £8 trillion barrier
(up from £3 trillion at the start of the Millennium), is it right that so much
wealth is concentrated in the hands of the older generations?
As national house prices have
continued to grow unabated (for example in the last eight years by 49.9%,
whilst real take home pay has only increased by 11.8%), this has meant younger people are finding it even
harder to get onto the property ladder and those already on it to move up it.
Looking at the older end of the age range for homeownership…
of the 16,122 homes in Neath, 4,769 households are 65 years or older, and 74.6% of those households (3,560) are owned (mostly without a mortgage).
A full split as follows …
- Owned 74.6%
- Council House 18.8%
- Privately Rented 3.6%
- Living Rent Free 2.8%
- Shared Ownership 0.2%
I talk with many Neath pensioners who want to move yet are
unable to. There appears to be a shortage of suitable properties in Neath for
members of the older generation to downsize into. Due to their high demand
and low supply, Neath bungalows and suitable ground floor apartments achieve on
average a 15% to 25% premium per square foot over two/three storey properties. Yet
would it surprise you only 1% of new builds in the UK are single storey bungalows
(compared to 7% 25 years ago)?
Neath pensioner homeowners are now worth £795.6m.
YouGov did a survey a couple of years ago and they found that
just over one third of homeowning pensioners in the UK were looking to downsize
into a smaller property. As I have stated before, as a nation, we need
to rethink how we can encourage older homeowners to sell their larger homes to
release them to the younger families that desperately need them.
The Government over the last 11 years have appeared to target
all their attention on first-time buyers with a strategy such as the Help to
Buy Scheme. However, this doesn’t address the long-established under-supply of appropriate
retirement housing vital to the needs of Neath’s quickly ageing population. Unfortunately,
Neath’s housing stock is sadly ill-equipped for this demographic shift to the ageing
homeowners.
Also, to add insult to injury, those more mature Neath pensioners
in their 80’s and 90’s who do live in the restricted number of Neath bungalows and
suitable ground floor apartments are finding it difficult to live on their own,
as they are unable to leave their bungalow/apartment because of a shortage of
sheltered housing and ‘inexpensive’ care home places.
This in turn means the younger 60 to 70-year-old Neath retirees (in their bigger two/three-storey family houses) can’t buy those Neath bungalows (occupied by the older retirees), which means those Neath families in their 30’s and 40’s can’t buy those larger family houses (occupied by the younger 60 to 70-year-old retirees) they need for their growing families … it’s like everyone is waiting for everyone because of the logjam at the top of the property ladder.
So, what is the solution? Quite simple – build more homes!
In
the last 30 years, the UK population has grown by around 12 million people, yet
the number of properties has only grown by around 4.2 million.
With obstructive planning regulations, immigration, people living longer and increased divorce rates (meaning one family becomes two) we have needed 275,000 properties to be built a year since the Millennium to just stand still and meet demand. Twenty years ago, the UK was building on average 185,000 households a year, that figure dropped in the five years after the Global Financial Crisis in 2008 to 140,000 households a year. Thankfully that has increased steadily over the last five years and last year we created 245,000 households in the UK, however, we still have all those years since the Millennium to make up for.
The answer is to build on more land for starter homes, bungalows and sheltered accommodation because land prices are holding back the property market, as the larger national building firms are more inclined to focus on traditional two and three-storey houses and apartments than bungalows (because they make more money from them). You might say there is no land to build the property on, yet …
only 1.2% of the UK is built on
with residential properties.
So
how could Neath people make money on this news? Shrewd Neath property investors
should consider purchasing bungalows, especially ones that need some titivating
(possibly after somebody has passed away). Bungalows purchased at the
right price and location are a great gamble for flipping. They should also be considered
for renting out as demand will only outstrip supply. This would be a start to
the solution of rebalancing the Neath property market so everyone is happier
with their lot.
If you would like a chat about the Neath property market – don’t hesitate to give us a call on 03300 563 555.
