There remains an insatiable appetite for buying property. Many of those who do not possess aspire to this goal and devote all their savings to it.
As for those who already have, they tend to want more. Whether it’s buying a bigger, better home, buying a holiday home or investing in rental accommodation, Britain’s obsession with owning a property never stops. not the first.
Owning property has become synonymous with both creating and preserving wealth, and as money continues to flow in, prices continue to rise.
Can you fix it? Each week, we speak with a real estate expert about the housing crisis to get their suggestions on how we might solve it.
Government interventions often seem to add fuel to the fire. Stamp duty holidays, help to buy, right to buy and other schemes were intended to help more people move up the ladder.
But while many of these initiatives were successful, they also had the effect of driving up property prices even further for those that followed.
Worse still, homelessness is on the rise. More than 300,000 people are homeless in England, many of whom are living in temporary accommodation, according to research by the charity Shelter.
In the new series of This is Money, we chat to a property expert each week to ask them what’s wrong with the UK property market – and how they could fix it.
This week we spoke to Russell Jewell, Managing Director of Untold Living, a developer and operator of purpose-built retirement communities in England.
Russell has spent more than 30 years in commercial real estate, working in consulting, investment banking and real estate investment management.
Is Britain experiencing a housing crisis?
Russell Jewell responds: Housing is a political football that has been played on the parliamentary field for decades.
From Right to Buy to Help to Buy, a myriad of policies have sought to make Britain a nation of homeowners, but none have provided truly sustainable ways to achieve this.
Russell Jewell, Managing Director of Untold Living, a new developer and operator of purpose-built retirement communities in England
The current crisis is the consequence of short-term decision-making, defined by politicians who think in five-year cycles between general elections, not the long-term strategic planning that is necessary.
And it is this myopia that has opened the generational chasm we face today; a situation which swallows up the income of young people, stuck in an increasingly expensive private rental market.
On the surface, the fate of the “generational annuity” contrasts sharply with the gargantuan earnings of their parents and grandparents.
After all, soaring house prices in recent decades mean that the over-50s have now accumulated 78 per cent of all UK property wealth.
However, what was once seen as a crisis that only affected young people aged thirty and under is quickly catching up with older homeowners, many of whom feel they have no choice but to continue living in older homes. large, family sized, with plenty of spare parts. bedrooms.
How does this compare to the past?
Reaching the first rung of the property ladder requires a much bigger leap today than for previous generations.
Throughout the 1970s, the average house price stood at £9,277, the equivalent of £68,493 today when adjusted for inflation and representing around 4.1 times the average income of the era.
Fast forward to November 2023 and the average house price stood at £285,000, an increase of 316% compared to the 1970s, according to research by the House Buyer Bureau.
However, average incomes have not kept pace, increasing only 94 percent over the same period. This means that today the average buyer needs 8.8 times their annual income to cover the cost of a home.
What was the main cause of the housing crisis?
Ask most people in the real estate industry and they will tell you their the biggest problem is the scheduling system – an outdated framework that has long been criticized as the main obstacle to housing construction in this country.
However, an often overlooked but important factor is the large number of rooms that are only used for collecting dust and, possibly, for Christmas decorations.
According to Zoopla, as many as 10 million of these rooms are in elderly people’s homes – or 2.6 million households in total.
What’s more, over-65s make up 19 per cent of the population and yet own 42 per cent of the UK’s housing wealth – most of which is tied up in homes with two or more spare bedrooms.
These stark statistics lead us to ask a different question, how we can more intelligently distribute existing housing stock, not just how we can build more.
In fact, research suggests that if everyone lived in homes sized to suit their needs, around 50,000 fewer new homes would need to be built each year.
How would you resolve the crisis?
The reality is that there is no silver bullet to solving Britain’s housing affordability and distribution crisis. There are, however, logical starting points that would genuinely help Britain “build back better” – as the government says it wants to do.
Firstly, the government must give priority to the ambitions of “recent buyers” as much as those of first-time buyers.
The truth is that there is already a huge surplus of living space in the UK. When you consider this alongside the fact that three million older people are actively wanting to “downsize” into more appropriately sized homes, the opportunity to unlock millions of unused rooms for first-time buyers becomes clear.
By making it easier for older people to downsize, we can make a real difference – so much so that for every bedroom added to the UK’s retirement housing stock, two to three are freed up in mainstream accommodation.
Surplus: Zoopla says 10 million unused rooms are in seniors’ homes
Unfortunately, many seniors have dismissed the idea of a right-sized move, citing a lack of suitable property options, the overall cost, and the general stress of moving as the main obstacles.
But if we can meet this demand by creating the purpose-built retirement communities that Britain needs – while making it easier and more affordable for older people to move – we can simultaneously help millions of first-timers. buyers.
And the benefits of more people don’t stop at a healthier housing market. More age-appropriate housing will also bring greater benefits to society, such as reducing the likelihood of older people being admitted to hospital, thereby reducing pressure on the NHS.
As a nation, we must of course continue to build new housing where it is truly needed.
However, housing construction must go hand in hand with a smarter approach to housing distribution – and retirement communities can play a key role in correcting the current generational imbalance.
In your opinion, will the housing crisis ever be resolved?
The exorbitant cost of buying a home means many believe they will never own their own home.
But with the general election fast approaching and the housing crisis fast becoming a cross-generational issue, there is every reason for hope.
With both the Conservative Party and Labor expected to put housing at the heart of their election promises, the housing crisis finally appears to be receiving the attention it so richly deserves.
This will bring untold benefits, including boosting our economy by putting more money back into the pockets of first-time buyers.
With the number of people over 65 expected to increase by 27% between 2018 and 2035, facilitating the large-scale construction of more age-appropriate housing will also ease the growing pressure on our health and social services in the years future.
Of course, all of this depends on the Government adopting a long-term vision for housing and recognizing the vital role that more retirement housing will play – not just soundbites that will help reach the next elections.
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