The population of 65 to 84-year-olds in NSW is predicted to grow by 97 per cent between 2006 and 2036 to 1.59 million. There has been speculation in the media that many are choosing to downsize their homes, but is this true, and how is the property market catering to the changing population?
According to the Downsizing Amongst Older Australians study published in 2012 by the Australian Housing and Urban Research Institute, there is no conclusive evidence that people are downsizing, of the demographics of downsizing or the type size of housing into which they move.
There are a number of property options available which are specific to older buyers. Strata properties for over 55s offer residents the benefit of limiting the minimum age of other tenants, but not everyone is keen to commit to ongoing strata fees.
On the other hand, there are approximately 595 retirement villages in NSW, accommodating more than 36,000 residents according to NSW Fair Trading. However, it can be hard for people to give up their independence and move into this type of property.
A study by Jones Lang LaSalle in 2008 titled Development in the Retirement Living Sector – Is supply meeting demand or meeting the mark? concluded that growth of retirement villages will continue along the coastal regions, but warned that supply may exceed take-up over the next few years if developers fail to factor in the consequences of a softer residential market.
“Usually you find that the decision to move from the family home is the most fearful change,” said Kathryn Hall, Principal at Kathryn Hall Real Estate.
“Once people reach age 75 and over, they are of a different generation and have often lived in the same house for most of their lives. They tend to be the ones who struggle with the decision making and it’s the kids who push them to do something.”
Kathryn’s said her busiest period is usually around public holidays, particularly Mother’s Day, when children visit their elderly relatives. It is during these visits that many try to convince their parents to make the move into a retirement home.
“It can take two to five years to get them to make that decision to move,” Kathryn added.
At the younger end of the spectrum, the baby boomers appear to be more willing to consider a change, in Kathryn’s experience.
“Now, because of the GFC, they are thinking ‘let’s sell this and buy the Winnebago’. The 50-60 year olds are not as attached to their homes anymore.”
She conceded that new developments can be expensive, unless you are willing to move into an apartment.
“It might be that those over 55s might buy an apartment or strata title townhouse, and then when they get to 70 they go into a retirement home,” she said.
Graeme Smith, Director of LJ Hooker Castle Hill is in the middle of downsizing himself.
“You get to the point where you do not want stairs, but you do not want to pay big management fees for a retirement home either,” he said.
Graeme recognises that there is a shortage of affordable single-level properties on the market. He blames this shortage on the resurgence in popularity of single-level properties among the young and a tendency by developers towards townhouse and unit developments. He points to the single-level villas of the 1960s and 1970s villas as a prime example of properties that are perfect for the aging market.
“There are people who will move into apartments, but in my opinion others want a bit more independence in something that’s low rise with a bit of privacy and small backyard for growing a few plants,” he said.
According to Graeme, there is not enough suitable property coming onto the market and that is having a knock-on effect, causing others to hesitate before putting their own property up for sale.
“People need to feel confident that what they want to buy will be available out there,” he said.
“There’s no real sense of what they are going to buy, so they do nothing or put off the decision to act.”
It is clear that there is a strong distinction between the 55 to 75-year-olds and the over 75 age group. While the over 75-year-olds are more timid in exploring moving, the younger generation of retirees coming through are much more open to the idea.
In the future, we could see downsizing as a two-step process, from apartment to strata or retirement village. Then again, they may just stick with the Winnebago.
- 1.8 million aged 55 and over in NSW*
- 56% of NSW residents aged 65 and over resided in Greater Sydney in June 2011*
- 9/10 of the locations with the highest concentration of 65 and older residents were located on the coast.
Hot spots for over 65s*
- Tuncurry (40%)
- Tea Gardens – Hawks Nest (37%)
- Sussex Inlet – Berrara (37%)
- Narooma – Bermagui (29%)
- Bowral (28%)
* 2011 Census - NSW
- 97% - The predicted increase in NSW population of the 65-84 year old age group from 2006 to 2036.
Last of the babyboomers to reach 65 in 2030, heralding the start of the start of the deceleration of the 65-84 year old age group in NSW.
This article was first published in the June 2013 edition of the REINSW Real Estate Journal.