How would YOU fix the housing market? Real estate experts say seniors need incentives to cut back

Whether it’s unaffordable house prices, higher mortgage rates, rising rents or increased homelessness: the housing market seems to be stuck in an endless crisis.

There remains an insatiable appetite to buy real estate. Many of those who do not own property strive and put their savings towards achieving it.

It is a dream that is increasingly out of reach for many, as the chronic shortage of housing causes house prices to rise and rents to rise.

Those who already own tend to want more. Whether that means buying a bigger and better house, buying a holiday home or investing in buy-to-let, the British obsession with acquiring property doesn’t stop at the former.

Owning real estate has become synonymous with both wealth creation and wealth preservation, and as the money continues to flow in, prices continue to rise.

Government interventions often seem to add fuel to the fire. Stamp duty holidays, Help to Buy, Right to Buy and other schemes were aimed at helping more people onto the ladder.

But while many of these initiatives were successful, they also had the effect of further increasing house prices for subsequent initiatives.

Worst of all, homelessness is increasing. According to research by the charity Shelter, more than 300,000 people are homeless in England, many of whom are in temporary accommodation.

In the new series This is Money, we speak to a property expert every week to ask them what’s wrong with the UK housing market – and how they would fix it.

This week we spoke to Russell Jewell, CEO of Untold Living, a developer and operator of purpose-built retirement communities in England.

Russell has worked in commercial real estate for more than 30 years, covering consulting, investment banking and real estate investment management.

Does Britain have a housing crisis?

Russell Jewell answers: Housing is a political football that has been thrown onto the parliamentary playing field for decades.

From the right to buy to helping people buy, countless policies have tried to turn Britain into a nation of homeowners, but none have provided truly sustainable means to do so.

The current crisis is a result of short-term decision-making, defined by politicians who think in five-year cycles between general elections, and not the long-term strategic planning that is necessary.

And it is this short-sightedness that has opened the generational divide that we face today; one that eats up the incomes of younger people trapped in an increasingly expensive private rental market.

On the surface, the fortunes of the “generation rent” stand in stark contrast to the gigantic profits of their parents and grandparents.

After all, rising house prices in recent decades mean that over-50s today have amassed 78 percent of total British housing wealth.

But what was once seen as a crisis that only affected younger people aged 30 and under is quickly catching up with older homeowners, many of whom feel they have no choice but to continue living in larger family homes with numerous extra Services. Bedrooms.

How does this compare to the past?

Reaching the first rung of the property ladder today requires a much bigger leap than previous generations.

During the 1970s, average house prices were £9,277, the equivalent of £68,493 today, after adjusting for inflation, and represented around 4.1 times the average income of the time.

Fast forward to November 2023, the average house price was £285,000 – a 316 per cent increase on the 1970s, according to research from the House Buyer Bureau.

However, average revenues have failed to keep pace, growing by just 94 percent over the same period. This means that the average buyer today needs 8.8 times their annual income to cover the costs of a home.

What was the biggest cause of the housing crisis?

Ask most people who work in the property industry and they will tell you that their biggest bugbear is the planning system – an outdated framework that has long been criticized as the main barrier to housing development in this country.

However, an often overlooked but important factor is the sheer number of bedrooms that are used for nothing other than collecting dust and possibly Christmas decorations.

According to Zoopla, as many as 10 million of these bedrooms are in the homes of older people – totaling 2.6 million homes.

Furthermore, over-65s make up 19 percent of the population but own 42 percent of Britain’s housing wealth – the majority of which are in homes with two or more extra bedrooms.

These grim statistics lead us to ask another question, one that asks how we can more intelligently distribute the existing housing stock, not just how we can build more.

In fact, research shows that if everyone lived in homes the size appropriate to their needs, approximately 50,000 fewer brand new homes would need to be built each year.

How would you solve the crisis?

The reality is that there is no silver bullet to solving the UK’s housing affordability and distribution crisis. However, there are common sense principles that would really help Britain to ‘build back better’ – as the government says it wants to do.

First of all, the government must give the ambitions of the ‘last buyers’ as much priority as those of the starters.

The truth is that there is already a huge surplus of housing in Britain. When we consider this alongside the fact that three million elderly people actively want to buy homes of the right size, an opportunity to free up millions of unused bedrooms for first-time buyers becomes crystal clear.

By making it easier for older people who want to be the right size, we can make a real difference – so much so that for every bedroom added to the UK’s stock of retirement homes, two to three are freed up for mainstream homes.

Unfortunately, many older people have written off the idea of ​​right-sizing, citing the lack of suitable real estate options, the overall cost and the general stress associated with moving as the main barriers.

But if we can meet this demand by providing the purpose-built retirement communities that Britain needs – while making it easier and more affordable for older people to move – we can help millions of first-time buyers at the same time.

And the benefits of right-sizing more people don’t stop with a healthier housing market. More age-appropriate housing will also bring wider benefits to society, such as reducing the likelihood of older people being admitted to hospital, reducing pressure on the NHS.

As a nation, we must of course continue to build new homes where they are really needed.

However, housing development should go hand in hand with a more intelligent approach to housing distribution – and retirement communities can play a key role in redressing the current generational imbalance.

Do you think the housing crisis will ever be solved?

The eye-wateringly high cost of buying a home leaves many thinking they will never own a home.

But with the general election just around the corner and the housing crisis fast becoming a cross-generational issue, there is every reason to be hopeful.

With both the Conservative Party and Labor expected to put housing at the heart of their election promises, the housing crisis appears to be finally getting the attention it so desperately deserves.

This will bring unprecedented benefits, not least boosting our economy by putting more money back into the pockets of first-time buyers.

With the number of over-65s expected to increase by 27 per cent between 2018 and 2035, making it easier to build more age-appropriate homes at scale will also ease the growing pressure on our health and social services in the coming years.

Of course, this all depends on the government taking a long-term view on housing, and recognizing the crucial role that more retirement housing will play – and not just soundbites that will last until the next election.