Census reveals that home care services in retirement villages are booming

The 2023 PwC-Property Council Retirement Census dropped today and while the headline shows that retirement villages offer affordable housing for older Australians, it also reveals that home care services are booming, keeping more residents independent for longer.

Key points

• The average two-bed independent living unit price grew 8.3% in 2023, compared to a 1.1% growth for national house prices; however, they are still on average 43% cheaper than the median house in the same postcode
• National on-market village vacancy decreased to 5% which is 6 percentage points lower than the prior year
• The average age of a retirement village resident is 80 years, with 75 being the average age of entry into a village
• Just over 60% of existing villages provide regulated home care services, an increase of 15 percentage points from 2022 and a whopping 31 percentage points from 2021

Affordability is an attractive prospect

Australia’s housing market is by no means buyer or renter-friendly at the moment as high prices and increased demand leave older people at the back of the line. However, the Retirement Living Council (RLC) is confident that the data shows the important role retirement villages play in providing affordable housing for older Australians. 

Their data shows the average cost for a unit in a retirement village is $559,000 compared to the $986,000 median house price in the same postcodes. That’s a big win for anyone struggling to secure a loan for a new house or with assets they want to set aside for retirement. 

But a low 5% vacancy rate is a challenge, as RLC Executive Director Daniel Gannon explained.

“Retirement villages are an affordable housing solution available to older Australians in an otherwise unaffordable housing market,” he said.

“Given the number of Australians aged over 75 will increase from 2 million to 3.4 million by 2040, a tight vacancy rate is concerning news for consumers and governments alike. This means governments need to get their skates on and actually start planning for ageing populations – starting with age-friendly housing.”

A recent announcement at the National Retirement Living Summit revealed governments will fund retirement living unit development as part of their national plan to build 1.2 billion new homes by the end of the decade. This presents a great opportunity for existing retirement living providers, and those looking to expand into the market, to diversify or strengthen their aged care offerings.

Home care services are booming 

Elsewhere, the percentage of operators providing home care services to village residents – or older people outside of the village – has more than doubled in just two years. Currently, 61% of retirement living providers offer home care services, compared to just 30% in 2021.

This supports the RLC’s goal to have retirement living play a far larger role in aged care service delivery. 

The percentage of new villages with co-located residential care services has actually decreased since 2022, dropping from 53% to 44%. But it does remain higher than in 2021.

Increasing construction costs are a potential contributing factor with rising prices for materials and labour strain budgets impacting project feasibility. The report also highlighted the limited supply of land which means residential care developments are more restricted than potential vertical retirement or independent living housing.

“From rising construction costs and limited land supply to evolving preferences of the ageing population, the landscape of retirement living is rapidly changing while affordability remains a key component of the retirement living sector in comparison to the residential housing market,” PwC Australia partner Funminiyi Oduko added.

Providers who do offer home care services can expect to see an average resident stay of 8.7 years in independent living units, while serviced apartment averages sit slightly lower at 5.2 years. 

The long-term tenure in resident stays gives aged care operators service delivery consistency, and more potential for helping a resident move into one of their own residential care settings, if applicable.

The RLC hopes this research will help reduce the pressure on the aged care sector. 

“This important report serves to inform industry, governments and consumers about how retirement and senior’s communities can help address these socio-economic threats,” Mr Gannon said.

“We can’t expect regulatory and policy change unless industry bolsters its research, thought leadership and evidence, like this important Census – after all, you can’t manage what you don’t measure.”

The full report can be viewed via the Property Council’s website.