Lancaster, like the rest of the UK, is experiencing a trend of shrinking household sizes, a factor that is likely to sustain property market stability and growth over the long term. As household sizes have decreased over the last century, the demand for housing has grown, creating a consistent need for more homes and providing support for property values.
The Trend of Smaller Households
Historical data reveals a significant decline in household sizes. In 1921, the average British household consisted of 4.3 people, which dropped to 3.2 by 1971 and further to 2.36 by the 2021 Census. Even a modest continuation of this trend would require millions of additional homes in the UK, exacerbating an existing housing shortfall.
Currently, the UK builds around 210,230 properties annually. However, this is insufficient to address not only shrinking household sizes but also factors like an aging population and annual net migration of approximately 180,000 people.
Regional and Local Insights
Across the UK, average household sizes vary slightly, with London and Northern Ireland at the higher end (2.57) and Scotland at the lower end (2.15). Lancaster’s average household size stands at 2.38, slightly above the national average.
Ownership types also influence household sizes. Among homeowners without mortgages, 82% live in one- or two-person households, reflecting the prevalence of older adults or retirees. In contrast, larger households—often families—are more common among homeowners with mortgages.
Interestingly, private rental households exhibit a balanced distribution across all household sizes. In Lancaster, private renters average 2.31 occupants per property. Further analysis reveals the following composition:
- 36.1% of private rental properties house one person.
- 28.8% house two people.
- 16.0% house three people.
- 19.0% house four or more people.
Implications for Lancaster’s Property Market
The trend toward smaller households creates a compelling case for Lancaster’s property market. A growing number of smaller households drives demand for housing, ensuring stability and potential value growth for homeowners. For prospective buyers, this trend highlights the resilience of Lancaster’s market, which aligns with national patterns of long-term growth.
Opportunities in the Private Rental Sector
The private rental market stands out as particularly well-positioned to benefit from shrinking household sizes. Nearly two-thirds of Lancaster’s rental properties house one or two people, reinforcing the appeal of smaller units for both tenants and landlords.
For landlords, focusing on smaller properties offers significant advantages:
- High Demand: The prevalence of one- and two-person households suggests a sustained need for compact rental homes.
- Better Yields: Smaller properties generally deliver better rental yields compared to larger homes due to lower purchase prices and competitive rental income.
- Flexibility: Smaller homes appeal to a wide range of tenants, from young professionals to older individuals downsizing, ensuring consistent occupancy rates.
Strategic Insights for Landlords
Investing in smaller properties, including one- or two-bedroom homes and bungalows, represents a practical strategy for landlords seeking to capitalise on demographic trends. These properties not only cater to current demand but are also likely to remain attractive as Lancaster’s population evolves.
Conclusion
Shrinking household sizes are reshaping Lancaster’s property market, driving demand and underpinning long-term stability and growth. For landlords and investors, smaller properties offer a reliable pathway to strong yields and steady returns.
If you’re a landlord looking to align your portfolio with Lancaster’s market trends, we would love to talk about how we could help you.