The sluggish housing market means that downsizing is no longer a straightforward process and many people find themselves needing to find short-term accommodation between selling their properties and finding a new home. Over three million homeowners plan on downsizing their properties in order to help fund retirement. Many of these retirees have equity locked in their homes which they need to access to boost their retirement income. Many of these will need short-term accommodation if they have sold their home, but have been unable to find suitable downsize property to purchase.
Over the past year, the average desired rental period specified by retirees hoping to flatshare has fallen from over six months to just over four months. This drop in the average length of stay combined with the rise in the number of retired renters suggests more retirees are using flatsharing as a cost-effective stop-gap during the downsizing process.
Given the limited period of time they need to flatshare, this development does not seem to mark the start of a period of social change, but signifies a further boost to the already buoyant rental market. The trend also means that many more recent retirees, or those about to enter retirement, are having to put their plans on hold, at least in the short-term. They may also be planning to compromise on the retirement nest egg they are able to build up for their ‘golden years.’
The optimistic slant to this development is that retirees are having to forestall their retirement plans but that they are generally able to find suitable permanent accommodation in only a few short months. This would signal that the state of the housing market is not nearly as bad as the easyroommate.co.uk research might suggest.
Some recent research on the condition of the housing market does seem to add weight to this more optimistic viewpoint. Not only has recent data pointed to an increase in mortgage lending and house sales (including first time buyer activity which, according to Halifax, reached its highest level in 2012 since the global crash of 2007) but several property portals have seen a jump in searches in recent months.
Combined with the Government’s New Buy and Funding for Lending initiatives, this should all help to raise transaction activity as pent-up sales demand is released - the Royal Institution of Chartered Surveyors (RICS) is even predicting that residential sales this year will reach their highest level since 2007.
If this momentum is sustained and the economy improves as expected, consumer confidence will rise and should help to kick-start a new cycle of price growth. This cycle of new growth could have the knock-on effect that those about to enter retirement, and recent retirees, will no longer have to resort to putting their retirement dreams on ice.