How would YOU fix the housing market? Property expert says older people need incentives to downsize

Whether it’s unaffordable house prices, higher mortgage rates, soaring rents or increased levels of homelessness, the housing market appears to be stuck in a never-ending crisis.

There remains an insatiable appetite to buy property. Many of those who don’t own aspire to, and pour their life savings towards achieving it.

It is a dream that continues to move further out of reach for many, as the chronic under-supply of properties means house prices rise and rents increase.   

As for those who already own, they tend to want more. Whether that means buying a bigger and better home, purchasing a holiday home or investing in buy-to-lets, the British obsession with acquiring property doesn’t stop at the first one.

Owning property has become synonymous with both wealth creation and wealth preservation and as the money keeps piling in, the prices keep going up.

Can you fix it? Each week we are speaking to a property expert about the housing crisis to find out their suggestions on how we might solve it

Government interventions often appear to add fuel to the fire. Stamp duty holidays, Help to Buy, Right to Buy and other schemes were meant to help more people on to the ladder. 

But while many of those initiatives were successful, they also had the effect of pushing up house prices further for those that came after. 

Worst of all, homelessness is rising. More than 300,000 people are recorded as homeless in England, according to research by the charity Shelter, with many in temporary accommodation. 

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

This week we spoke to Russell Jewell, chief executive 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 consultancy, investment banking, and real estate investment management. 

Does Britain have a housing crisis?

Russell Jewell replies: Housing is a political football which has been tossed around the parliamentary playing field for decades.

From Right to Buy to Help to Buy, myriad policies have sought to make Britain a nation of homeowners, but none have provided genuinely long-lasting means of doing so.

Russell Jewell, chief executive of Untold Living, a new developer and operator of purpose-built retirement communities in England

Today’s crisis is a consequence of short-term decision-making, defined by politicians thinking in five-year cycles between general elections, not with the long-term and strategic planning that is needed. 

And it is this short-sightedness which has opened the chasmic, generational divide we face today; one which is swallowing up the earnings of younger people who are trapped in an increasingly expensive private rental market.

On the surface, the plight of ‘generation rent’ is in stark contrast to the gargantuan gains of their parents and grandparents. 

After all, spiralling house prices over the past few decades mean that the over-50s have today amassed 78 per cent of all of Britain’s housing wealth.

However, what was once perceived as a crisis that only affected younger people aged thirty-something and under is quickly catching up with older homeowners, many of whom feel they have no choice but to continue living in larger, family-sized homes with numerous spare bedrooms.

How does this compare to the past?

Reaching the first rung of the property ladder today requires a much greater leap than it did for previous generations.

Throughout the 1970s, average house prices sat at £9,277, the equivalent of £68,493 today after adjusting for inflation and representing roughly 4.1 times the average income at the time. 

Fast-forward to November 2023 and the average house price stood at £285,000 – a 316 per cent increase compared to the 1970s, according to research by House Buyer Bureau. 

Average earnings, however, have failed to keep pace, growing by just 94 per cent during that same timeframe. This means the average buyer today requires 8.8 times their annual income to cover the cost of a home.

What was the biggest cause of the housing crisis?

Ask most people working in the property industry and they will tell you their biggest bugbear is the planning system – an antiquated framework which has long been criticised as the main hurdle to housebuilding in this country.

However, an often overlooked yet significant factor is the huge number of bedrooms that aren’t being used for anything beyond gathering dust and, possibly, Christmas decorations.

According to Zoopla, a whopping 10 million of these bedrooms are found in the houses of older people – amounting to 2.6 million homes in total. 

Moreover, the over-65s make up 19 per cent of the population yet own 42 per cent of the housing wealth in the UK – most of which is tied up in homes with two or more spare bedrooms.

These stark statistics lead us to ask a different question, one which asks how we can more intelligently distribute existing housing stock, not just how can we build more. 

In fact, research suggests that if everybody lived in homes that were appropriate in size for their needs, around 50,000 fewer brand-new homes would need to be built each year.

How would you fix the crisis?

The reality is that there’s no silver bullet to solving Britain’s housing affordability and distribution crisis. There are, however, logical starting points that would genuinely help Britain to ‘build back better’ – as the Government says it wants to do. 

First, the Government must prioritise the ambitions of ‘last-time buyers’ as much as it does first-time buyers.

The truth of the matter is that there is already a huge surplus of living space in the UK. When we consider this alongside the fact that three million older people actively want to ‘right-size’ into more appropriately-sized homes, an opportunity to unlock millions of unused bedrooms for first-time buyers becomes crystal clear.

By making it easier for older people who want to right-size to do so, we can make a real difference – so much so that for each bedroom added to Britain’s retirement housing stock, two to three are released to mainstream housing.

Surplus: Zoopla says 10 million unused bedrooms are found in the homes of older people

Unfortunately, many older people have written off the idea of right-sizing, citing a lack of suitable property options, the overall cost and general stress involved in moving as the main barriers.

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

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

As a nation, we should of course continue to build new housing in the places where it is genuinely needed. 

However, housebuilding should go hand-in-hand with a more intelligent approach to the distribution of housing – and retirement communities can play a key role in rectifying today’s generational imbalance.

Will the housing crisis ever be fixed in your opinion?

The eye-wateringly-high cost of buying a home means many believe they will never own their own home.

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

With both the Conservative Party and Labour expected to make housing core to election pledges, the housing crisis seems to finally be receiving the attention it so sorely deserves.

Doing so will yield untold 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 from 2018 to 2035, making it easier to build more age-appropriate housing at scale will also ease growing pressure on our health and social services for years to come. 

This does, of course, all hinge on the Government taking a long-term view on housing, as well as recognising the critical role more retirement housing will play – not just soundbites that will see it through to the next election.