NOTHING is quite so susceptible to the brutal nature of supply and demand as our housing market, and interventions to help those trying to get a foot on the bottom of the ladder are commendable but fraught with difficulty as they can fuel the market and push properties further out of reach.
But we draw attention today to a new phenomenon which will introduce another variable into a complex picture - the downsizers. There has been a boom in the number of homes changing hands for cash, which appears to be fuelled by older couples selling the family home and moving to a smaller property, perhaps with an eye on enhancing their pension pot.
This has always happened but the practice appears to be becoming increasingly prevalent, with the number of cash purchases almost doubling in the last ten years, rising from 19% to almost 36% over that time. The fact that beauty spots in Argyll, Sutherland and Kirkcudbright are showing the highest percentages for cash purchases points to a generation who have done well in spite of the recession preparing for their retirement.
Much of this is a good thing. Many are now downsizing for a variety of reasons - freeing up funds to enjoy their retirement but also moving to more appropriate properties in which to live out later days independently. Freeing up larger homes for families to live in is to be celebrated, providing families on their way up the housing ladder can afford them.
Similarly, older people living in properties more appropriate to their later years can only help wider society cope with the provision of care for the frail elderly.
But there are upsides and downsides to this trend. A downsizing couple, cash-rich from the sale of a family home which may shot up in value over decades, may be paying over the odds for their new property, pricing out of the market those on their way up the ladder.
Conversely, the cash proceeds of downsizing may be going to help sons and daughters get an entry into the property market. This is all good news for those lucky enough to be in the property game, but may well be a further factor locking out those with no help from parents and low or insecure incomes.
Add into that mix a crisis in social housing, about to be exacerbated South of the Border by a fresh wave of right to buy, which also favours older couples, and the crisis for young families could worsen.
The average Scottish home bought in 1981 will have netted a profit of £120,000 by this year. Saga estimate that three-quarters of Scots over 50 are considering a move to a home more suitable for retirement, higher than the UK figure. In contrast making such a move simply to release cash is less of a priority than in the rest of the UK, 13% compared to 22%.
We do not pretend to know all the answers to the implications of such a complex market, but with housing a paramount issue with the electorate there is a clear case for Scottish Ministers to commission research on how this phenomenon will play out.
People moving from large family homes to properties more suitable for their later years is a benefit to themselves and wider society faced with funding increasing care bills. But the effect of this wave of cash-rich baby boomers active in the property market require analysis, particularly if they are fuelling the buy-to-let boom, which could be another factor in consigning the next generation to a fate of never owning their own home.
This article has been edited to correct literals
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article