Are older people the solution?
Published 05/06/2016 | 02:30
The new Minister for Housing, Simon Coveney, recently highlighted two areas that he believed could help alleviate the severe shortage of accommodation across the country and particularly in Dublin. The first was student accommodation and, in brief, the argument is that providing significantly greater numbers of purpose-built student accommodation will free up a large part of the private rented sector for the rest of the market, in particular low-income families.
The second area the minister highlighted relates to older people living in large family homes. This is undoubtedly a sensitive subject - an ESRI report earlier in the year, which actually called for greater opportunities for older people to stay living in their communities, was generally perceived to have portrayed older people as something similar to the health system's "bed blockers".
Clearly, the solution to the shortage of housing is not as simple as somehow coaxing older people out of their homes. Sure, we might coax them out - but then where would they go? The answer, of course, comes back to supply, and supply of the right kind.
It is helpful to think about the over-65s as having a variety of housing and care needs. Obviously, there are those who need full-time residential care and this is increasingly likely to be a requirement the older people get. However, less than 5pc of the over-65 population live in nursing homes. And the general consensus among those active in the area is that this fraction should, if anything, go down, not up.
This then leaves over 95pc of the over-65s, the vast majority of whom live in the same family home they reared their children in. Within this group, there are those who wish to stay in their homes and who do not require the kind of levels of care that mean they ought to move out. But there are also those who have care needs of varying levels. Where Ireland lacks homes in particular is in the independent living with care segment of the market. This is an active and indeed sought-after part of the US housing market and increasingly also in the UK. A specialist housing provider, Pegasus, for example, recently redeveloped the main stand of one of England's top cricket teams into a stand combined with luxury apartments for older persons.
However, Ireland lacks this segment almost entirely. Where independent living with care does exist, it is typically an extension of more regular social housing provision and therefore the remit of approved housing bodies. Certainly, the social housing sector needs to increase its capacity in independent living with care homes. And to do this, it will require an overhaul of how we subsidise both housing and healthcare - replacing the myriad different systems with a unified payment that reflects a household's housing and care needs.
But there is also clearly a missing market in independent living with care for those not dependent on social housing, ie, those who have the means to provide for themselves. Why is this market missing? Unfortunately, the answer for this segment is the same as the answer for all the other segments of residential real estate in Ireland currently - construction costs are simply too high for this segment to be viable. The segment suffers not only from high build costs but also from high care costs, which make the maths even tougher.
If that does get sorted, the independent living with care segment may, however, only comprise 15pc to 20pc of the over-65 population. We are still left, then, with at least 75pc of the over-65s, who currently have very little choice other than to stay in the family home.
As I discovered a few months ago, when a so-called empty nester responded to one of my columns with a letter to this paper, there are definitely those over the age of 65 who have no intention or desire to move at all, unless they have to. But to assume everyone over the age of 65 is the same is equally erroneous. Just as there are elderly couples enjoying their retirement in the family homestead, so too are there lonely widows or widowers worried about their safety, their energy bills or general maintenance costs. These are people who would love to move somewhere that better matches their needs, while at the same time freeing up some of their housing equity to meet their needs over the coming decade or two.
It's important to remember though that people have an idea of progress in their lives. An empty nester in their 60s wants, if they move, to move to somewhere they can be proud of rather than a place where they look longingly back at the past and their "real home". This means the new home has to tempt them out. Almost certainly, it will also have to be in the same area they are currently - where their networks and amenities are likely to be.
This leads to the idea of densifying the suburbs, ie, providing the kind of low-density apartments that will tempt older people to downsize in the area where they currently live. Which brings us back to a long-standing issue seen in this column, namely construction costs. If we can't build good quality homes given our own budgets, then older people are no more the solution to the housing shortage than turning away FDI jobs or trying to stop people from having families.
Ronan Lyons is assistant professor of economics at Trinity College Dublin and author of the Daft.ie Reports