By Joel Abbey, Associate Partner and Business Manager at CACI
The last 18 months has seen the political climate shift considerably. From a general election to a referendum to another general election. All this political upheaval, particularly Brexit, has likely affected the way consumers spend. In the spring, we saw the £200 million launch of Liberty Retirement Living, who aim to provide homes for over 55’s looking to downsize – they already have five retirement villages in the pipeline and work is due to start in September. Is this an indication that post-Brexit life is treating older generations well? How has it affected the economic stability of older generations and those looking to move into retirement villages?
Here at CACI, we know that the customers most likely to choose retirement villages can be split into two categories: ‘Affluent Achievers’ and ‘Comfortable Communities’. Affluent Achievers are some of the most financially successful people in the country. They live in wealthy, high-status rural, semi-rural and suburban areas of the country and are predominantly baby boomers.
Meanwhile, Comfortable Communities is a category that contains much of middle-of- the-road Britain. They might be found in smaller towns, suburbs or the countryside and consists of all life stages. Most of these areas have stable families and empty nesters, particularly in suburban and semi-rural locations. The other demographic that fits into this category are those comfortably-off pensioners who live in retirement areas around the coast or in the countryside.
If one were to restrict these categories to those only aged 65 and over, an interesting trend emerges regarding their feelings of economic security since the Brexit vote.
Unsurprisingly, the political and economic instability initially caused consumer confidence to decline in the months following Brexit, with overall confidence shrinking 5 per cent. While older generations are more likely to have voted Leave and were therefore naturally more confident in their finances leading up to the vote, they conversely became increasingly concerned with the economic situation since Brexit. Over 65’s became most fearful for their financial future in December 2016 – which represented a 6 per cent loss in confidence since Brexit. However, since December, consumers have begun to feel more positive. CACI’s monthly ‘British Population Survey’, which asked consumers monthly if they felt ‘better’ or ‘worse’ about their financial situation, showed an increase in confidence of 6.6 per cent for Affluent Achievers, and an increase of 8.3 per cent in confidence for Comfortable Communities between December 2016 and April 2017.
If CACI’s findings are used correctly, we can give housebuilders and property developers a valuable insight to the older market. While consumer confidence shrank following the Brexit vote, meaning potential house buyers might become more reserved regarding their decisions, the upturn in confidence since December may represent an opportunity in the market Liberty Retirement Living are capitalising on. Housebuilders and property developers must fully understand the consumer mind-set of the particular audience you’re looking to provide homes for in order to deliver their needs. It is therefore crucial that companies looking to build homes for retirement age buyers or build retirement villages should bear in mind their targeted audience. How does the older generation want to spend their money and what economic and political issues will cause them to become more reluctant in their spending? With political upheaval following the recent general election, consumer confidence could see another dramatic shift in housebuying potential.