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Older Australians looking to downsize or purchase a property to spend their golden years in can take advantage of the affordability of retirement units relative to traditional homes.

Over the 18 months to December 2022, the average cost of a two-bedroom Independent Living Unit (ULI) in a retirement village increased by 6.6% to $516,000 while national house prices over the same period grew 26% to $831,900, according to the recently released Retirement Census by the Property Council and PwC.

Overall, units in retirement villages cost 48% cheaper compared to the median house prices in the same suburb.

Despite being relatively cheaper than traditional real estate, retirement housing is actually suffering the same struggles when it comes to supply.

In fact, the Census found that the three-year development supply pipeline of retirement units fell by more than half to 5,100 dwellings compared to the previous forecast of 10,500 dwellings.

Meanwhile, the national retirement village occupancy remained steady at almost 90%, which represents almost full capacity.

Retirement Living Council of Australia executive director Daniel Gannon said the results of the Census indicate how crucial retirement villages in providing affordable housing options for older Australians, who often had to get by with their fixed incomes amid the rising cost-of-living pressures.

“At a time when national housing affordability is eroding, and health care costs are also growing, the value proposition of retirement communities is strengthening – but there are some warning bells starting to sound,” he said.

For Mr Gannon, the higher construction and debt costs together with general economic uncertainty are also affecting the supply of retirement housing.

This is an important discussion to have, given that based on estimates, the number of Aussies older than 65 will increase from 4.4 million to 6.6 million by 2041.

“Australia’s population is ageing, which means our three tiers of government need to address and solve the challenges associated with housing this demographic cohort now,” Mr Gannon said.

“If governments make it harder for operators to build and operate retirement communities, the supply clamp will tighten even further – on a sector that we know offers an affordable and bespoke offering for older Australians, who simply can’t keep up with the traditional market which is becoming increasingly unaffordable to rent or buy into.”

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
Featured Online ExclusiveUp to $4k cashback
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
6.15% p.a.
6.15% p.a.
$2,437
Principal & Interest
Variable
$0
$0
90%
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

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Photo from @gettysignature at Canva.