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Housing for the elderly: Status quo and market potential

Oct 02, 2006

The issue of demographic change is a major concern in general, not least for the German housing market. The fact that the proportion of households with persons over 65 is expected to rise from its current level of almost 30 % to over 40 % by 2035 is clear evidence of this. This trend is, all too often, regarded – erroneously – as a threat. It cannot be denied that population figures, especially in the rural areas of Germany, will wane substantially. But this will not necessarily be true of the urban agglomerations. It is, furthermore, a mistake that the issue of an ageing population should frequently be associated with infirmity and senility. On the contrary, today’s generation of “new oldies” is healthier, in a better material position and more active than any generation before.

Demographic change thus has the potential to become one of the key drivers for macroeconomic demand in Germany in the medium term. Surveys return a clear picture when it comes to residential occupation patterns: The overwhelming majority of today’s pensioners are completely satisfied with their living arrangements and wish to remain in their current property for as long as possible. Almost all of them do stay put, even if this is likely to become increasingly difficult as they get older. In addition to the ever dwindling resources for statutory long-term care insurance, this is the main reason why it is more than likely that the demand for care homes has been significantly overestimated.

Instead, there is much greater demand for services which help individuals stay in their own home for as long as possible. Survey responses suggest that while individual requirements are subject to relatively generous estimates, only a small proportion of what is estimated is actually utilized. This indicates a certain untapped market potential in this sector. The German Association for Consumer Research (Gesellschaft für Konsumforschung – GfK) puts a figure of around EUR 15bn per year on this potential in the field of modernization and maintenance services and EUR 26bn per year for the provision of associated services and support. However, current income levels render it well-nigh impossible to mobilize such large sums, thereby generating a need for dedicated financing and savings instruments - both while savings are being accumulated during an individual’s active working lifetime, and as such funds are being drawn on in retirement.

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Housing for the elderly: Status quo and market potential (only available in German)