A care revolution in retirement villages, the dawn of the granny flat era and additional innovative rental solutions are among the big downsizing trends expected across 2021.
While 2020 was a year of dramatic upheaval and change due to COVID-19, 2021 will hopefully see a return to ‘business as usual’ in our daily lives.
However, that doesn’t mean the world will stand still and it’s still expected to be a year to usher in a series of major changes to retirement living and downsizing - as outlined below:
More innovative rental solutions coming our way
It’s no secret that Australia, in coming years and decades, is facing a dramatic increase in the number of seniors who will require rental accommodation.
Thanks to Australia’s soaring property prices, the number of Australians aged over 55 who are private renters is expected to increase from 647,584 people in 2016 to 1.110m in 2031 - a jump of 72 per cent.
Over the same period, there will only be a modest 13 per cent increase in over 55 homeowners.
Fortunately, some innovative rental options are already emerging, and more are expected.
Downsizing.com.au understands that a number of companies with new rental models are looking to launch in 2021, including one that purchases or manages properties and then sets up group seniors households in these properties, and another looking to help senior home-owners to fill empty bedrooms with older flatmates.
You can add to this list the growing number of build-to-rent and co-housing providers, along with more retirement village operators offering rental only solutions.
Of course, Downsizing.com.au already offers its free Senior Flatmates service, which allows older Australians to look for like-minded flatmates.
2021 will be the year when senior renters, and seniors rental solutions, go mainstream.
Continue rise of the land lease communities
With a rapid rollout development model which harnesses Commonwealth rental assistance and avoids stamp duty (and usually deferred management fees), the Australian land lease community industry is growing quicker than kikuyu grass in summer.
In late 2020, Stockland announced it had sold four Victorian retirement villages, as the organisation aligns its development pipeline towards land lease communities. It’s not the only retirement village operator charging into the land lease space.
2021 will be the year when land lease living becomes a buzzword for Australia’s over 50s.
Care factor well above zero in retirement villages
It’s not all bad news for retirement villages though.
The Aged Care Royal Commission will be publishing its final report on 26 February.
It’s odds-on that the Royal Commission will support new care models, and retirement villages are in the box seat to taking a greater role in a revamped national care solution.
This trend is already underway. The latest Retirement Living Census reported that 30 per cent of retirement villages were co-located with an aged care facility (the highest number in four years). Meanwhile, the 2019 Census reported that 39 per cent of retirement village operators were also offering home care, up from 33 per cent in 2017.
Meanwhile, this year NSW will join Victoria and South Australia by implementing reforms that will allow departing retirement village residents to be able to fund their aged care accommodation costs, even if their dwelling has not sold.
In other words, the link between retirement villages and care will grow stronger, giving villages a clear value proposition over land lease communities which are largely vacant in this space.
Retirement village residents reach the sky
This retirement vertical village trend has been underway for a while, but you can also expect 2021 to be the year that retirement villages really begin to establish themselves as high-rise urban communities.
This will create another unique value proposition for retirement villages, given that the business model of land lease communities means they will never work in a high-density environment.
The 2020 Retirement Living Census reported that 56 per cent of new villages currently under development are either vertical or a combination of vertical and broadacre / horizontal. This figure is up nine per cent from the 2019 census.
In an industry webinar to discuss the Census findings in late November 2020, Lend Lease Retirement’s managing director Nathan Cockerill said two types of retirement village residents were emerging.
“I do see two distinctly different types of resident, now,” Mr Cockerill said. “You've got a group of residents who want to live in the inner-urban (area) with the amenities close, which is what we're looking at doing. Plus, you got those who are looking for a lifestyle or a sea-change type environment, who are looking for the coastal villages.”
To this end, during 2021, we can expect to see activity on a cluster of Sydney high-rise retirement villages which secured planning approval in 2020.
Dawn of the granny flat era
During the above webinar to discuss the results of the Retirement Living Census, an interesting comment was made by Kerry Lehmann, from South Australian retirement living provider Omega Communities, that some retirement village sales were being lost because family members had convinced their parents to instead move into a granny flat.
It’s hardly surprising. Granny flats are the sleeping giant of Australia’s over 50s housing industry.
During 2021, it’s expected that the Australian Government will introduce proposed legislation to exempt granny flats from capital gains tax, when a family member is living in the property and a formal agreement is in place.
This will ensure that someone can build a granny flat for a loved one, and document the arrangement, and not face the prospect of exposing the entire family home to a tax burden.
As States continue to relax planning regulations for this modest form of density, 2021 could be the year when the granny flat building industry matures and individual builders start to establish a nationwide presence.
As outlined in a Downsizing.com.au post-COVID-19 trends report, downsizers are now more likely to be footloose during 2021 and willing to move to regional locations and places which they perceive to be safer.
Expect 2021 to be the year when downsizers are more willing to move location if the grass looks greener.
Increased focus on equity release
During 2021, and on the back of the release of the Retirement Income Review, pressure will grow on the Australian and State Governments to remove barriers which are stopping over 50s from tapping the equity of their most valuable asset - the family home.
This equity release could either be through downsizing, or using financial products which allow homeowners to stay in the home and still draw cash from it.
Much will depend on the efforts of the various industry lobby groups to bring evidence-based and politically-feasible reform options to government.
See Mark discuss these trends in a video