The trends driving change in retirement living

There’s no denying that retirement living such as retirement villages are changing with the times.

From the integration of technology to the increasing age of residents moving on, there’s definitely a steady shift occurring in the retirement living sector.

But have you thought about what trends are driving the changes?

Tony Massaro, the PwC Partner who leads the Real Estate Advisory team in Sydney, has been conducting the retirement living census in conjunction with the Preoperty Council for the past three years, and during that time he’s seen some interesting trends come out of the results.

One of the biggest trends he’s noticed is how prices have changed.

The 2016 census showed that the average cost of a two-bedroom retirement village unit is $398,000 – up from $375,000 two years ago.

That’s equal to an average of 67% of the median home price in the postcode you’re in.

“The trend that the data shows from an affordability perspective is that retirement villages are affordable when compared to the median house price or apartment unit price,” Mr. Massaro told Starts at 60.

“You’re also seeing a number of operators whose service fees have maintained pretty well.

“They haven’t seen a lot of inflation, which is good.”

Another of the interesting trends appearing in the census is the change in demographic for retirement living.

The average age of a resident living in a retirement village is increasing.

Only 4% of retirement village residents are younger than 65, with the average age of a retirement village resident rising to 80 last year.

The average age of new residents has increased from 74 in 2015 to 75 in 2016.

Mr Massaro said it was a great example of demographic matching between the age of the residents and the age of the village.

He said that as villages age, the average age of residents will increase as well.

“Say you get a bunch of 73 to 76 year olds looking a new shiny village and they move in there,” he said.

“Fast forward 10 years and you’ll have a number of residents  around the age of 85 still living there.

“A unit might come up for sale in that village and a 75-year-old potential resident may have a look at it but say ‘these guys are 10 years old than me, this is not the right village for me’.

“An 83-year-old is more likely to say ‘these guys are my speed’.”

Another trend appearing in the changing demographic is the rate of singles and couples living in retirement villages.

In 2016, the rate was 60% single residents and 40% couples.

According to Mr Massaro, the number of couples was a higher number than most people would have imagined.

“What that is saying is that more and more couples are deciding thatmoving into a retirement village is a good thing,” he said.

“I take that as a positive,  in that the good news about how enjoyable it can be to live in avillage is out there and there are more and more couples saying ‘let’s make the move’.”

As the demographic of retirement village residents changes, the configuration of retirement villages is also changing.

More than 70% of retirement living units are now two bedroom units, and that’s becoming the standard for retirement living.

Mr Massaro said the mix of living options had certainly changed over the years.

“Take an 85-year-old today and a 65/70-year-old moving in in a few years,” he said.

“The 85-year-old is generally happy for a relatively small one bedroom place, while a 65-year-old would probably want a two-bedder. 

“Most of the new retirement villages are heavily skewed to two-bedders and in some instances 3-bedders.”

So, where are these trends heading in the future?

Well, Mr Massaro sees a lot of the trends continuing in the next census, particularly around affordability and age.

“I think we’ll see continuing affordability and I think we’ll see the configurations being a lot of two bedroom units,” he said.

“The average age has gotten a little bit older and if you look at some of the government reforms happening, I think it will continue to drive the age up to some extent.

“The average new resident age will probably continue to stay in the mid-70s – between 74 and 76.”

And then there’s occupancy rates, which in 2016, showed that more than 90% of all retirement village units were occupied.

Mr Massaro expects that trend to continue.

“As residents move in and out villages are rarelyat 100% occupancy, but when you’re in the mid 90’s from an occupancy perspective, it’s right where you want to be as a village operator,” he said.

“We’re seeing continued strong occupancy and strong demand as the population ages.”

You can read the full 2016 retirement living census here.

What do you think of the changes in retirement living? Do you live or plan on living in a retirement village?