Demographic Changes

The United Kingdom has begun to witness a significant shift in its demographic shape; increasing numbers of retirees are changing many of aspects of our society including the economy, our health system and ultimately, our housing.

Within Scotland, the working population is forecast to reduce by 131,000 by 2037, meanwhile the number of people aged over 65 is set to increase by 550,000 to 1.4 million, an increase of at least 100,000 every five years. This unprecedented level of growth is going to be spread geographically across all communities.

Rural and Coastal

Areas which have historically been popular lifestyle choices for retirees such as Dumfries and Galloway, Fife and Moray will continue to be popular. Fife in particular, is going to witness very strong growth with a 60% increase in the number of retirees; increasing from 67,000 to 107,000. This reflects the accessibility of the area and its established desirable, coastal communities.

Settled in Suburbia

The suburban local authorities surrounding Scotland’s key cities are primarily thought of as family orientated areas, but as people age the profile is due to shift. For example Aberdeenshire is forecast to see 31,000 more retired households, South Lanarkshire 36,000 and West Lothian 20,000. Residents in these areas may seek to downsize from the family home but stay in the same area and benefit from the amenities and transport links.

Urban Utopia

Scotland’s cities are going to experience significant growth in the number of retirees. This growth is going to be fuelled by those who already inhabit cities choosing to remain there and those attracted to the city for the urban lifestyle and amenities on offer. For example the city of Edinburgh’s over 65 population is set to grow by 46,000, Glasgow’s by 40,000 and Aberdeen’s by 18,000 by 2037. These cities are also forecast to witness growth in working age population; Edinburgh’s by 70,000 and Aberdeen and Glasgow’s by in excess of 30,000. Therefore housing of all types will continue to be in high demand, creating a competitive market.

Implications for Housing

Regardless of the geographic location of retirees, this shift has important implications for housing. At the last census, 60% of households headed by someone over 65 owned their property outright. Furthermore, of those aged 65, over 50% under occupied their properties and the figure is similar for those aged 50 to 64. This suggests that there is a substantial downsizing opportunity for many and there is considerable potential for younger lifestyle downsizers rather than the traditional needs based move which we often associate with downsizers and retirees. Ultimately the right product in the right location could motivate many households to move.

The £250,000 Challenge

The average transaction value in Scotland in the year to March 2016 was £166,624 and there were 100,074 transactions.

Of these transactions only 17%, took place above the UK average of £250,000 and only 4% took place above £400,000.

Therefore whilst it is positive that there is a considerable number of over 65s who own their property outright, it is unlikely that many people will able to release large amounts of equity.

The challenge for developers operating in retirement sector in Scotland will be providing desirable properties at attainable prices.