The UK is experiencing a shortage of family housing, as supply struggles to keep up with demand. However, experts now claim bungalows could help to solve the problem. Savills explained that by encouraging older adults to downsize to single-level housing, larger homes could be freed up for the nation's families. Currently, there are around 55,000 household downsizes each year, releasing equity of around GBP 7 billion. This contributes to the GBP 3.5 billion of financial support given to first-time buyers.
According to Savills, as the market improves over the next five years, this may increase to 90,000 households releasing equity of GBP 14.6 billion. However, the barrier to downsizing remains the lack of appropriate stock, with just 0.7 per cent of properties advertised in Q1 on Rightmove retirement housing. Bungalows made up 9.2 per cent of all advertised stock and creating more could help to satisfy demand.
Currently, bungalows come at a price premium, thanks in part to their location in coastal areas or retirement hotspots. The average two bedroom bungalow has an asking price of GBP 180,000. This is around 24 per cent above all two-bedroom accommodation in the same local authority. Savills claims this "reflects the fact that a lot of the existing stock has redevelopment potential, not least because of the ability to extend upwards within the context of relatively large plots". This means older adults are also competing with growing families for homes.
Savills is quick to note that bungalows are "not a silver bullet solution". They currently carry a premium that locks out many less wealthy downsizers who are often unable to unlock the necessary value from their existing property. "Furthermore bringing more new bungalows to the market is not easy, not least because of the relatively high development cost and limited viability of relatively low density development," Savills explained. Consequently, the onus is on planners and developers to find the products needed to meet the needs of homeowners.
- Thursday 12 September 2013