Demographics could hold the key to long-term buy-to-let profits
Whether you’re making a property investment with the objective of capital gain or the benefit of regular rental income profit, it pays to pay attention to what’s happening in the wider economy and how that might create long-term property investment opportunities.
In our investment education, you’ll find a huge resource to help you discover the best places to invest in property UK. In this property investment blog, I’m going to examine a phenomenon that looks likely to shape the UK property investment market for decades. It’s another piece of the property investment puzzle and one that many property investors and investment gurus will be late to realise.
Factoring demography into your property investment decision-making could pay big dividends.
What does demographics mean for property investors?
In simple terms, the demography of a country is its population: how many women and men, what skills and education they have, and their ages. We’re living in a rapidly ageing society. Traditionally, pensioners have made one of two lifestyle decisions. They either stay put in the family home, or they downsize to a little country cottage or coastal retreat. It looks like it’s changing.
Living trends help to determine property trends
My parents and grandparents have often told me how they would continue to live in their parents’ house until they got married. When they did move out, they moved into a house or bought a property near to where their parents lived. Society was less mobile, and it wasn’t uncommon for whole families to live within a few neighbouring streets.
From the 1960s, a new trend emerged. Children began to go to university at the end of their school life. The mass production car made travel easier. Children in their late teens and early twenties began to seek work not in the local town, but in a different county. Families became spread.
Property investment opportunities changed with this trend. Property investors bought properties designed for young professionals and young families. The millennial generation has begun to buy and rent properties for lifestyle – near to shops, schools, and leisure amenities. Meanwhile, their parents (the baby boomers) moved away from towns, preferring to commute to work and live in the suburbs, or even further out.
A new demographic property investment trend is emerging
Today’s baby boomers (soon to be pensioners) are among the richest the UK has ever seen. They’ve benefited from the years of full employment, have quadrupled (and more) their money on property investment made in the 1970s and 1980s, and will have final salary pensions that are now a thing of the past.
But they crave something else. They want the lifestyle their children are enjoying. They don’t want to sit in heavy traffic for either work or play. They also want to be closer to their children and grandchildren. They’re dumping their cars (or using them less often) in favour of living where the action is: in town and city centres.
This trend could be your key to long-term property investment profits. The baby boomers aren’t just downsizing with a strategy of selling their village house and buying an inner city apartment. Increasing numbers are selling up, banking the money, and renting as a lifestyle choice. As I discussed in a previous investment blog, students aren’t today’s typical renters.
Retirees and near-retirees are today’s relocators
The growth sector of the UK investment property market is among people aged in their 60s and 70s. Recently retired baby boomers are more likely to move today than at any time in the past. According to a report from Hamptons International, in the last three years:
- House moves by people in their 30s has increased by just 1.7%
- House moves by people in their 60s has increased by nearly 15%
- House moves by people in their 70s has leapt by 25%
When you’re making a property investment, it might be wise to consider the older generation as a target market. Perhaps most striking of all is not that the baby-boomers are moving, but where they’re moving. The number of seniors moving back into towns and cities rose by 8% in the last three years.
Cities across the country have become ‘net importers’ of the older generation, instead of net exporters.
It is particularly the case of provincial ‘market towns’, where high streets have been transformed into pedestrian paradises. As large supermarkets have moved to edge-of-town locations, high streets have once more become a mecca for smaller, family-run boutique shopping. Coffee shops, cafés and restaurants provide the social scene that the younger generation has found on social media.
In these locations, silver renters benefit from a range of amenities, excellent transport facilities, and, most importantly, closeness to family – especially the grandchildren.
Developers spotted this trend early
Some developers saw this trend emerging a decade and more ago. Those new villages that have been developed near market towns have been prime property investment locations. The homes are modern, yet traditional. They’re close to the centre of town, but not too close, offering the best of both worlds – the convenience of a walk or short bus journey to the hustle and bustle, and a five-minute drive to green fields and rolling hills.
In the centre of town, developers have been building apartment blocks that appeal to silver renters and home buyers that want to ditch their car entirely. All shopping and entertainment needs are catered for on the doorstep. Transport links provide easy journeys to visit children and babysit grandchildren.
What type of investment property is best to benefit from silver renters?
Retiring baby boomers don’t want to feel isolated. They want to feel a part of a community. That’s why the retirement villages and city centre apartment complexes are so popular with this age group. The most sought after appear to be those that benefit from amenities such as landscaped gardens and spas, with hairdressers, bistros and libraries within walking distance. In a word, convenience.
Convenience extends beyond local amenities and transport
While you might think that retirees would like a ‘project’ to keep them occupied, they are far more likely to want to buy or rent new build properties. I’ve never yet met a retiree who has time to kill. In fact, most I know tell me they have no idea how they ever had the time to go to work. The last thing they want to be doing is fixing problems around their home. They want the time to enjoy themselves. New build properties fit perfectly with the lifestyle needs of retiring baby boomers.
For maximum property investment profit potential, do your research
While demographics are starting to change the property investment landscape, it’s important to do your research and ensure that you buy in the best places to invest in property UK. If the property fundamentals aren’t present, even the best designed inner city apartment block or edge-of-town development won’t benefit from the demand that will produce outstanding property investment returns.
In the course of our property investment research, we study 108 data points across 324 areas in the UK. We call this our ‘Hotspots Algorithm’. To learn more about this and how property investment could help you achieve your financial objectives, contact us today on +44 (0)207 923 6100.