Over-55s delay downsizing exacerbating home supply crunch

More owners stay put in response to pandemic, valuing larger properties and settled communities

George Hammond 

      © Daisy-Daisy/Alamy 

Older homeowners are increasingly opting to stay put rather than downsize, in a response to the pandemic that is exacerbating the UK’s unprecedented housing supply crunch.

More over-55s are hanging on to their homes — often larger-than-average properties — and adding to a shortage that has fuelled spiralling house prices over the past 12 months.

Fewer than one in four households headed by an over-55 plan to downsize in the near future, according to a report from Legal & General Financial Advice — a smaller proportion than in the last such survey three years ago.

These proposed moves would free up roughly 2.9m homes, says the company. 

When L&G Financial Advice similarly analysed the willingness of older homeowners to sell up in 2018, it estimated that the cohort would release 3.1m homes to the market in the near future.

“Covid-19 has clearly changed the mindset of many older homeowners, and we can see there has been an uplift in those who want to keep hold of their homes,” said Sara McLeish, chief executive of L&G Financial Advice.

“Over time, priorities can change, and it is only natural that over the course of the [past] 16 months people have grown closer to their local community, valued having family nearby and enjoyed having the space to relax while in lockdown,” she added.

The company estimates that about three-quarters of over-55s own their own homes. 

The most common reason given by those who decided to stay in their existing properties was that they wanted to remain attached to their communities, with outdoor space also a priority.

The decision of older homeowners to stay put has suppressed an already-limited supply of new homes into the market. 

Property portal Zoopla estimates that the stock of homes currently for sale is 26 per cent down on the average level through 2020, with demand soaring and new supply failing to keep pace.

Sales are up more than 40 per cent in the year to June compared to the year before, according to the company. 

The reopening of the residential sales market in May 2020, following two months of lockdown restrictions, drove a surge in transactions, spurred by buyers wanting to take advantage of the government’s stamp duty holiday, which was introduced in July last year and ends on September 30.

The rise was accelerated by some purchasers shifting their lifestyles to new working patterns, and seeking larger properties to accommodate working from home.

The imbalance between supply and demand is unlikely to correct immediately, even with the government winding down stimulus measures it introduced a year ago to boost the market, according to Zoopla.

High demand fuelled by lifestyle changes “has further to run, especially as office-based workers receive confirmation about flexible working, allowing more leeway to live further from the office,” said Gráinne Gilmore, head of research at Zoopla. 

As a result, there is likely to be more upward pressure on house prices.

Larger family homes have been in particular demand over the past 12 months, and the average price of a house in the UK has increased by 7.6 per cent in that time compared to an average increase in flat values of 1.2 per cent, according to Zoopla.

But the lack of supply may eventually act as a drag on demand later this year and into 2022 “as buyers hold on for more stock to become available before making a move,” predicts Gilmore.

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