- Affordability gap between retirement units and traditional homes in WA has widened.
- Older Western Australians among the hardest hit by cost of living pressures.
- Higher building costs and economic uncertainty are creating an undersupply situation.
Retirement living has been revealed as an affordable alternative to traditional housing. Not only is the average cost of a retirement unit about half the median house prices for the same areas, the gap continues to grow.
The new 2022 PwC/Property Council Retirement Census has revealed the average cost of a two-bedroom unit in a retirement village in Western Australia grew by 12.7% over the 18 months to December 2022 to $374,00, while median house prices in the same locations over this period rose by 16.9% to $657,000.
This data highlights the importance of housing diversity and the role that retirement villages play in providing affordable housing options for older Western Australians, said Retirement Living Council executive director, Daniel Gannon.
“On average, units in retirement communities across metropolitan Perth are 46% cheaper than the median house price in the same suburb,” Gannon said.
Not the same as aged care
Retirement villages are often confused with aged care, said Gannon.
“They are not the same thing.
“Retirement living communities offer a unique housing option that enhances wellbeing and lifespan for older Western Australians, and actually delays – and can prevent – entry into aged care.”
Daniel Gannong, RLC executive director
Gannon says that, at a time when housing affordability is shrinking, and healthcare costs are growing, the value of retirement communities is strengthening.
“But there are some warning bells starting to sound,” he said.
Supply pipeline halves
The report found that the three-year development supply pipeline for retirement units across Australia has fallen by more than half to 5,100 dwellings, compared tot the previous Census forecast of 10,500 dwellings; Western Australia is expecting 127 units in the coming 36 months.
Occupancy for Perth is steady at 89%, representing effectively full capacity.
“The reality is we have a market that’s pretty much full, which actually provides an affordable housing option when few other affordable options remain, and yet barriers to building more are emerging,” Gannon said.
“It’s not an unfamiliar story for this part of the housing market. Higher construction and debt costs together with general economic uncertainty have applied downward pressure on the supply line.”
Gannon urged caution to policymakers, given supply is forecast to slow and a legislative review that will affect the sector in Western Australia.
“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 Western Australians, who simply can’t keep up with the traditional market which is becoming increasingly unaffordable to rent or buy into,” he said.