Australia’s over 50s housing industry is moving into 2022 in a position of relative strength, with buoyant house prices and positive consumer sentiment meaning the industry can expect a positive year.
Despite the overarching positivity, a range of factors including COVID-19, the unaffordable general housing market and the climate change debate are however introducing quite significant changes as to how this housing is delivered.
With this in mind, below are my expected trends for the retirement housing industry in 2022.
More secure over 50s rentals
As property prices continue to rise, and mortgage sizes balloon, more over 50s are entering retirement as renters. At this stage of their lives, these renting over 50s are desperate to find secure, long-term and affordable accommodation.
A separate batch of over 50s are currently owners but see the sense in becoming renters, particularly in lifestyle-rich urban areas.
These over 50s want to avoid the transactional costs of buying, particularly as they may only be living independently for as little as a decade, and are keen to move into commitment-free ‘lock up and leave’ accommodation so they easily travel.
During 2021, we saw significant development industry activity in this area.
There was the launch of seniors’ group household company Calyptus, which seeks to bring together over 50s renters into suburban homes.
Mirvac also continued to expand its aspirational rental towers offering, including for downsizers, while ASX-listed operator Eureka expanded its portfolio of pensioner-friendly rental villages.
Expect this trend to continue in 2022, but with a clearer industry focus on the different over 50s rental markets which are on offer.
This will mean that different operators will start to clearly target specific over 50s sub-sectors, ranging from affordable through to aspirational.
For instance, Stockland is expected to join Mirvac in the aspirational rentals space, while there will be continued growth in affordable pensioner-friendly rental housing, particularly in fringe areas around major cities and in regional and rural areas.
As well, during 2022, expect the ‘build to rent’ industry will make it clearer that the underlying value proposition behind all these options is rental security. What these operators are offering is an ongoing secure lease, with little chance of an eviction or radical rent changes.
A clearer pathway to care, and more luxury care
There is an increasing divergence in the over 50s housing industry between operators which cater for people wanting an independent, active lifestyle, and those who are delivering accommodation which has a clear pathway to care.
The care-focussed part of the industry has seen significant activity and change in the past year.
The different pricing and care models on offer are complex, but include operators seeking to make it easier to move out of a retirement village and into an aged care facility on the same site, or indeed allowing people to stay in a luxury retirement village and receive intensive home care.
Aveo introduced a range of pricing options, which were in part designed to make it easier to move from a retirement village and into care, while Ryman continued the blockbuster expansion of its ‘one stop shop’ care model in Victoria (and another big NZ operator Summerset will soon join it there with a similar model).
A likely change during 2022 will involve more retirement village providers offering in-house home care services, under their own name and at scale, so people can avoid having to say they’ve entered a nursing home.
In addition, more ‘luxury’ care facilities will come on to the market, which is in part in response to some of the publicity from the Aged Care Royal Commission.
‘Retirement’ housing no more?
2022 is expected to be the year that work spaces become firmly embedded in over 50s communities. This trend can be traced to the remote working trend sparked by COVID-19, along with the rising percentage of older Australians who are working to pay off mortgages.
A survey by RSL Lifecare released just before Christmas 2021 found that Baby Boomers were looking for retirement village dwellings which provided bedrooms and a work space. The survey found this represented a marked difference to the ‘World War Two’ generation, which had little interest in a work space.
This trend is expected to challenge some State retirement village laws, which continue to say these villages should not be occupied by people who are still working full-time.
The same trend could see the beginning of the end of the concept of ‘retirement housing’ and instead increased use of marketing terms such as ‘lifestyle’ or ‘downsizer-friendly’ housing.
During 2021, we saw the launch of Land Lease Home Loans offering finance products for residents entering Ingenia land lease communities, including to carry across existing mortgages.
During 2022, we are likely to see an expansion of these finance products to allow more working over 50s to switch their mortgage into a smaller property which better suits their stage of life.
Environmental friendly communities on the rise
Despite the continuing presence of COVID-19, climate change dominated the political agenda in 2021 and is expected to do so again in 2022.
All retirement living companies, but especially those exposed to public capital markets, are under tremendous pressure to prove their green credentials.
At the same time, these companies can deliver significant ongoing savings and convenience to their residents by introducing features such as solar power, communal electric cars, car charging stations and water conservation. Indeed, some of the early adopters of solar power are delivering their residents free or half-price electricity.
A divide is beginning to emerge in retirement living.
In some communities, residents have utility autonomy and are able to access less expensive power, transport and water via renewable means, while in others the operator controls these aspects and charges an old economy-style price.
This divide will continue to grow in 2022, with the old economy operators facing being left behind. Regulators are watching this.
During 2021, the Victorian Essential Services Commissioner proposed a price cap on embedded network customers, including in retirement communities. Meanwhile, the NSW Government is looking at a similar measure for land lease communities and also creating greater clarity as to how solar energy can be introduced to these communities.
More multi-generational communities
With the concept of COVID-19 bubble encouraging families to come closer together, multi-generational retirement housing is expected to be a big trend in 2022.
Already, in late 2021, IRT announced its proposed new retirement village south of Sydney would have live-in carer accommodation, including for the adult children of frail village residents.
The carer’s accommodation will have its own front door and access to a bathroom, and would share a kitchen with the main dwelling. It will be the first adaptable live-in carers’ accommodation at any IRT retirement village.
Meanwhile, Queensland-based retirement village operator Aura recently published the story of Kimberley Richards, who is the primary carer for her mother Jan at The Avenue at Maroochydore.
“I didn’t realise I could live here with Mum as her carer,” Kimberley said. “We have only recently moved in but I have already seen positive changes in Mum. She is really happy here and ready to make friends and get involved.”
Aura Holdings has a policy that is open to having a carer live with a resident in their apartment within the company’s southeast Queensland retirement villages.
Downsizing.com.au is aware that another operator is looking at introducing multi-generational housing as part of the redevelopment of a major retirement village.