Booming future for retirement living

Boom time for Australia's retirement living industry

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GOING UP: More cranes are on the horizon as retirement operators plan more accommodation in the next three years.

GOING UP: More cranes are on the horizon as retirement operators plan more accommodation in the next three years.

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The 2021 Retirement Census has revealed huge growth ahead for Australia's retirement industry

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Shorter sale times, increased affordability, rising occupancy levels and more accommodation in the pipeline have signalled a booming future for retirement living in Australia.

The 2021 PwC/Property Council Retirement Census Snapshot Report, the largest annual snapshot of data and trends in the retirement living sector, revealed a shortening of average Independent Living Unit (ILU) selling days, increased affordability when compared to residential, rising occupancy levels nationwide and a large development supply by 2024.

It showed that the development supply pipeline planned by participating operators has doubled from the 2020 Retirement Census from just over 5500 to over 10,500 over the next three years.

The report gave a clear indication that retirement living in Australia has been recognised and valued for its role in keeping residents safe and secure over the past 12 months.

Despite the impacts of COVID-19, village occupancy increased by 3 per cent nationally to 90 per cent compared to 87 per cent in 2020.

Retirement Living Council executive director Ben Myers said the positive outcome was not news to the retirement living industry.

Ben Myers.

Ben Myers.

"This data is a testament to operators nationwide. Posting such incredibly strong data in the second year of the COVID-19 pandemic, at a time when there have been lots of operational challenges as well as ongoing legislative change is remarkable," Mr Myers said.

"The 2021 Retirement Census had a record level of participation, giving us our strongest data set ever.

"The trends are clear: retirement living is affordable, safe, secure and geared to support a healthy ageing process."

The new data has helped to identify opportunities and threats for the industry, particularly demand for home care services and the impacts of government regulation.

Strong house price growth nationally has driven the affordability of ILUs with the average sale price 55 per cent of the median house price in the same postcode, compared to 67 per cent in 2020.

Sydney buyers are in pole position, with the average two-bedroom retirement living unit sale in 2020-21 valued at just 35 per cent of the median house price in the surrounding locality. This compares to 48 per cent in 2019-20.

South Australians have the least buying power, with the price differential being 67 per cent in Adelaide and 83 per cent in regional areas.

PwC partner Tony Massaro, who prepared the census for the Property Council of Australia, reflected on the positivity conveyed in the 2021 results.

"The 2021 Retirement Census paints a positive picture of an industry that has weathered the storm of COVID-19. Higher average occupancy rates and favorable affordability conditions are a testament to the resilience of the sector despite the steep economic and social challenges faced by the globe - especially as Australia continues to encounter an ageing population," Mr Massaro said.

"We're delighted that a record 62 operators across 766 villages and representing approximately 77,000 units have taken the time to contribute to the Retirement Census. With record participation rates, we're confident the data insights will continue to help improve the sector and drive its future direction."

Other key findings were:

  • COVID-19 has been good for the retirement village industry, with 39 per cent of villages reporting increased sales since the pandemic's onset, compared to 23 per cent reporting less sales;
  • Retirement living operators are ramping up supply, with the five-year forecast of new village dwellings increasing from 8500 in 2019-20 to 10,500 in 2020-21 - a record amount for the Retirement Living Census;
  • The increased linkage between retirement villages and care services is continuing, with around 40 per cent of new retirement villages now co-located with an aged care facility, compared to 28 per cent of existing villages;
  • There is a continuing move towards apartment-style villages, with 41 per cent of new villages in 2020-21 being classed as vertical, compared to 33 per cent in 2020;
  • There has been a move towards consumers signing contracts where they don't receive a share of any capital gains upon the dwelling's sale.
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