One of the biggest issues with assessing the housing market for older people is the wide range of products and services on offer along with the number of different names for them.

Figure 9 sets out our model of the older persons’ housing market based on the level of care required, the affluence of the resident and the tenure of the housing. Overall, we estimate there are 480,000 nursing and care home beds, and 515,000 homes specifically for older people across England.

^{Source: Savills Research}

Around 80% of units in the nursing and care home sectors are owned and operated by the private sector, while only 25% of Extra Care and Retirement homes are privately owned.

In terms of overall provision, the nursing and care home sector equates to 5.0% of people aged 65 and over while the Extra Care sector houses 0.6% of older people and 4.8% of older people live in retirement housing. Retirement villages typically offer a combination of these products and are a subset of these numbers.

For comparison, a report by Housing LIN in 2011 indicated that 17% of over-60s in the United States and 13% in Australia and New Zealand live in dedicated retirement communities, although many of those homes will be simply age-restricted. Analysis by ARCO suggests the provision of Extra Care type housing in these countries is on average 5.3% of older people compared to only 0.6% in England.

Clearly there is a substantial opportunity for the sector to grow if it delivers products that meet lifestyle as well as needs.

^{Source: Savills using EAC, LaingBuisson}

Aspirational downsizing

The emergence of premium developments

The retirement housing market has traditionally focused on ‘needs’ based demand. However, over the last few years we have begun to see the emergence of an aspirational downsizer market targeting wealthier purchasers. As the chart below shows, the economics and hence propensity to downsize increase along with housing wealth.

Some of the more traditional private sector retirement housing developers have recognised the potential of this market. In recent years we have seen the likes of Pegasus Life and McCarthy and Stone move away or at least expand from the mass-market sector and start to deliver premium developments targeting aspirational downsizers.

^{Source: Savills Research}

Aspirational Downsizers

Limited numbers but growing

■  Range of options for existing housing stock (bungalows), general market new build or premium retirement housing

■  Mid to late 60s, children left home, desire to unlock housing equity or move to smaller home. Need for larger than average rooms, plenty of storage space. No desire for safety features (alarm, etc) but future compatibility can be a plus

Retirement Housing

455,000 homes

■  Self-contained units offering estate management, alarms

■  Typically in their late 70s, likely to be recently widowed and so higher female-to-male ratio or onset of health issues

■  Purchase driven by need rather than aspiration (e.g. bereavement, no longer able to manage/maintain large family home)

Extra Care Housing

60,000 homes

■  As per retirement housing but with additional communal facilities (e.g. restaurant), 24-hour emergency staffing, additional care or domestic help available

■  Typically over 80 years old and in need of more care than offered in standard retirement housing

Nursing/Care Homes

480,000 beds

■  In need of full-time nursing or care