Property slump playing role in retirement plans

SPECIAL REPORT: WA is not matching the national rate for retirement apartment and home builds.

The nation’s ageing population and the baby boomer time bomb is forcing Australian aged care and retirement homes to reassess their offerings and adapt to the growing demand for services.

Better health outcomes and availability of in-home care have allowed the current population of retirees to remain active in their communities far longer than previous generations.

Despite this, the Property Council of Australia’s executive director of retirement living, Ben Myers, told Business News that retirement villages continued to be a viable option for many older Australians who wanted to retain their independence and remain part of their community.

The Property Council defines a retirement village as catering for residents who can generally live independently and are not very frail or dependent on assistance. In contrast, residential aged care facilities offer supported living for senior Australians who need daily personal assistance and cannot live alone.

(Click here to see a PDF version of the full three page annual report)

A retirement village includes accessibility features to assist older residents, but was described by Mr Myers as more of a lifestyle option than an ageing necessity.

In collaboration with PwC, the Property Council’s annual survey into retirement living has produced some concerns about retirement living in Western Australia.

The 2018 PwC/Property Council Retirement Census used data supplied by 52 organisations nationally.

“From a WA perspective there’s some real concerns about the supply pipeline compared to what we’re seeing in the rest of the country,” Mr Myers said.

“Our survey shows that, in the current financial year, our respondents indicated that they’re building 2,000 individual retirement village units, that’s either in new villages or in new stages of existing villages.

“Only 29 of those are reported to be delivered in WA, and that number doesn’t get much better over the next few years.”

Mr Myers attributes this to factors affecting both the supply of and demand for retirement apartments and houses.

“There continues to be a fairly soft residential property market in WA, which has made it a more difficult proposition for people to look at downsizing,” Mr Myers said.

“Selling the family home and buying something smaller isn’t going to give people the nest egg that they might have hoped for, because obviously construction costs haven’t reduced.

“If you can find a buyer for your home, you may actually be taking a loss on what you paid for it, or accepting a lower price than what you might if you hold on.

“So I think we’re seeing in WA people looking to hold on to their homes, hoping the market will pick up again, and that’s made demand for retirement villages weaker than what we’re seeing around the rest of the country.”

The booming in-home care market may also be a factor in this decline in demand, as ease of services related to health, cleaning and maintenance allows those living in the community to remain in their homes for substantially longer.

The Retirement Census highlights a rising trend for multi-storey developments, with 30 per cent of new developments either apartments, or a combination of vertical and horizontal.

Only 15 per cent of existing villages are vertical.

In WA, regulatory uncertainty had halted this trend, Mr Myers said.

“A retirement village in WA goes onto a particular title scheme, which then prevents any other use or development of the site, is my understanding,” he said.

“So that makes it very difficult to co-locate aged care, and to look at some of the more innovative options that we’re seeing in some of the other states where vertical retirement villages are being built within shopping centres, medical centres, or whatever might exist.”

Mr Myers noted that this supply issue was primarily in the hands of government.

With the current state population over the age of 65 sitting just under 350,000, according to the Property Council’s 2018 Retirement Living national planning report card, Mr Myers said it was becoming increasingly urgent to find a solution that would allow for more flexibility.

“There’s real regulatory uncertainty,” he said.

“The state government keeps talking about legislative reform, and there’s been a promised paper on that for some months now that hasn’t materialised.”

“That impacts the ability of retirement village operators to get the financing and prepare to make the huge financial commitment needed to proceed with the development.”