OPPPS, Wrong year! Another stuff up! The sooner 2011 is over with the better!
It was supposed to be set to play on the 18th Jan 2012! Well you got this one a bit earlier than planned.
"Well, my time went so quickly I went lickety-splitly out to my ol' fifty-five As I pulled away slowly, feelin' so holy God knows I was feelin' alive"
Tom Waits, 1st verse from Ol' 55, from the album Closing Time (1973)
Well many of those over 55 living down under would be feeling a whole lot more alive if only they could afford to move.
Population aging in Australia is expected to accelerate. At present, there are five million people over the age of 55 across Australia. Within the next 40 years, that number is expected to exceed 11.5 million. This represents a projected growth rate of 150,000 people per annum.
Within a generation, a third of Australians are going to be aged over 55 years old and close to a quarter will be aged over 65.
Assuming that all those aged over 55 years were to move into a new dwelling, there would be a need to create 90,000 new homes across the country each year for this older market segment. However, most "55 plus" households cannot afford to move into more appropriate accommodation. The high entry and rental costs of the current retirement products on the market prevent them from doing so. Many will be forced to age in place.
As a result, the more practical requirement is currently for around 15,000 new retirement dwellings per year, three-quarters of which are needed across the eastern seaboard. This market is quite undersupplied. Our estimates suggest that new retirement housing construction has ranged from between 3,500 to 4,250 new starts each year over much of the last decade.
Some relevant statistics
About 80% of "55 plus" households own their home outright, with around 15% either renting or living with relatives. Most have not moved in the last five or ten years, whilst half have not moved in over 20 years, as the number of times a person moves residence declines considerably with age.
When "55 plus" households do move, it is primarily for lifestyle reasons (35%); followed by affordability grounds (25%) and the want for a smaller and more hassle-free home (20%). One in ten moves to be closer to family or friends.
Many in this older market segment are very sensitive to price. Their new abode must have a strong connection to the local setting. This market also places a high value on living with others of similar background, age and interests. This trend also seems to accelerate as one ages.
Whilst many own their principal place of residence, and have done so for some time, many Australians over the age of 55 years are cash poor. The latest official data shows that 55% of our older residents live on less than $500 per week and 35% live on less than $350 per week. Sadly, one-quarter of Australian residents aged over 45 years have no personal income, with 45% largely relying on a government pension or allowance. A further 25% rely on their investments, including superannuation.
The median house price across our Australian capital cities is now $540,000. For attached dwellings it is $455,000.
However, older Australians generally own older properties, which in turn generally have lower median values . In addition, many of the properties held by older Australians need repair, sometimes in a major way; are usually located in middle to outer ring suburbs and have limited renovation appeal, especially to a younger buying audience.
In short, many properties held by older Australians could be difficult to sell and for a premium.
Purchasing activity, for most in the over 55 age group, is discretionary. They need to be "pulled" from their existing homes. They often have strong ties to the local area, but if the right product can be found, they will move.
Most currently live in detached houses and for some, moving into a medium density development is daunting. What can increase the appeal of living in a townhouse or villa is if the complex is gated, which includes internal duress alarm systems; single level product with a small private garden; the ability to keep a pet; and well maintained central facilities – as long as the body corporate fees are reasonable and affordable.
Pet ownership is important, as eight out of ten over 55 households in Australia own a pet.
This market also prefers built product and are generally reluctant to buy off-the-plan or deal with a builder. They also like to try before they buy, often renting in a new estate for a period of time before eventually purchasing.
Also, whilst this market is somewhat prescriptive as to what they want in a new home, most make the decision to buy or rent based on the "community" rather than the individual dwelling and its features.
Whilst many older Australians would like to move to more suitable accommodation, most are forced to age in place, as alternative arrangements such as the traditional retirement villages are too expensive to purchase or even rent.
The need to provide affordable retirement accommodation is already acute across Australia, and this need will escalate in the future. This strong and growing demand presents an opportunity for housing providers to either retrofit existing underperforming retirement estates with a better model, or start building new conforming product.