With a large number of private developers looking to expand, and housing associations looking at providing market rent or for-sale products, what is the potential for future supply in the market?

Our analysis of the future supply pipeline using data from Glenigan indicates there are schemes containing around 30,000 Extra Care and Retirement homes in the planning system or approved. One third of these homes are currently in the planning system, with the majority (90%) in the private sector. Among the 19,000 homes on schemes that have been approved, 12,000 homes have started on site with the majority (68%) being built by the private sector.

^{Source: Glenigan (excludes schemes under 10 units)}

With recent delivery of housing for older people averaging around 7,000 homes per annum, this suggests the short-term prospects for new supply are slightly above recent levels.

In terms of housing need, the projected 2% annual increase in the number of people aged 65 and over between 2015 and 2020 would require 11,000 homes per annum. This broadly matches our analysis of the current supply pipeline and suggests that supply may soon be at the lower levels needed to maintain existing provision per older person.

However, the number of people aged 75 and over (which is probably a better benchmark for needs based housing) is projected to grow by 3.2% over the same period. Along with the need to replace ageing stock, this suggests a target of 18,000 homes per annum would be more appropriate to maintain existing provision.

^{Source: Savills Research}

Maintaining our existing provision of housing for older people is a minimum benchmark for how much new housing is required. As our analysis of international comparisons suggests, there is still substantial room for growth in the proportion of older people living in housing designed and built specifically for them. A relatively unambitious target of increasing the provision of Extra Care Housing from 0.6% of older people to 2% would require an additional 130,000 homes. This is still well below the 5.3% average across the US, Australia and New Zealand.

Meanwhile, increasing the provision of Retirement Housing from 4.8% of older people to 10% would require an additional 500,000 new homes. Increasing the provision over a ten-year period would require an additional 60,000 new homes per year above the levels required to maintain existing provision. This could be a substantial opportunity, provided developers can solve the £250,000 challenge.