Why Peterborough’s Shrinking Households Could Shape the Future of its Property Market

Smaller household sizes are one of the reasons the Peterborough (and UK) property market and house prices will continue to hold up well in the medium to long term. British households have been shrinking over the last 100 years, and this trend will drive demand for property, providing stability and growth to house prices.

A Historical Perspective

The numbers tell a compelling story. A century ago, in 1921, the average household size in Britain was 4.3 people. By 1971, this had decreased to 3.2 people per household. At the last Census in 2021, the figure had dropped further to 2.36 people per household.

While this may not seem like a drastic change, the implications are significant. If the population remained steady for the next 50 years and household sizes followed the same trend, the UK would need to build an additional 11.5 million homes (230,697 per year) to accommodate smaller households. Considering that the UK is currently building only 210,230 homes per year—while also addressing net migration of approximately 180,000 people annually and an aging population—there is a clear shortfall in housing supply.

Household Sizes by Region (2023)

The average household size across the UK in 2023 is 2.36 people. Here's how it breaks down by region:

• United Kingdom: 2.36
• London & Northern Ireland: 2.57
• South East: 2.43
• East Midlands: 2.41
• West Midlands: 2.38
• East & South West: 2.36
• Yorkshire and the Humber: 2.31
• Wales & North West: 2.27
• North East: 2.17
• Scotland: 2.15

In Peterborough, the average household size is slightly above the national average at 2.55 people per household.

Exploring Tenure and Household Composition

When examining how household size relates to property tenure, some interesting trends emerge:

• Homeowners (outright): 82% live in one- or two-person households, often older residents or retirees.
• Council housing: 41% of single-occupant households fall into this category.
• Mortgaged homes: Typically house larger families, with four or more people.
• Private rentals: Show an even distribution across household sizes, closely mirroring national averages.

Peterborough’s Private Rental Market

The private rental market in Peterborough provides a unique lens through which to view this trend.

• There are 54,744 private renters in Peterborough, occupying 20,716 private rented homes. This equates to an average of 2.64 renters per property.

Breaking this down further:

• 25.0% of private rental properties house 1 person.
• 29.2% house 2 people.
• 20.2% house 3 people.
• 25.6% house 4 or more people.

This distribution highlights the dominance of smaller households within the private rental sector.

What This Means for Peterborough’s Property Market

Peterborough’s shrinking household sizes suggest a stable and growing demand for housing. For homeowners, this trend offers confidence in the long-term growth of property values. For potential buyers, it highlights the resilience of the local property market, aligning with national demographic shifts.

Opportunities in the Private Rental Sector

For landlords, smaller households present a lucrative opportunity. With over half of Peterborough’s private rental properties housing just one or two people, demand for smaller homes is robust. These properties often provide better rental yields compared to larger family homes due to their lower purchase prices and high rental demand.

From young professionals seeking their first home to older individuals downsizing, smaller properties appeal to a wide demographic. They also offer landlords greater flexibility and consistent occupancy rates, making them a valuable addition to any portfolio.

Key Takeaway for Landlords

Smaller households—and smaller properties—are the future of Peterborough’s rental market. Focusing on compact, affordable homes, including smaller bungalows, can provide landlords with a competitive edge, maximising rental yields and ensuring long-term success.

If you’re a landlord—whether self-managing or working with another agent—and want to discuss how your portfolio aligns with current trends in Peterborough’s rental market, feel free to give us a call. We’re happy to share our insights with no obligation or cost.