Australian Property Investment Retirees Don’t Buy Retirement Villages

You can’t open a newspaper or drive past a desirable coastal location without coming across the signs – you know the ones the happy smiling couple who look just past middle age who are enjoying a pool-side gin and tonic or maybe enjoying a friendly tennis match. They are invariably advertiseumetns for “over-45’s” or “adults” communities – what used to be known as retirement villages. The question is – are they are a good property investment?

Australian retirement villages appear to be in trouble though – it sounds like the 20-somethings who came up with the advertising jingles and billboards didn’t actually ask the potential clients what they wanted. The result is that – according to The Australian around 1/3 of sections available for sale in new or existing retirement communities are in the hands of the receivers. It sounds like that developers and their advertising agencies forgot that the older generation didn’t grow up being told what to think by the media – and have an annoying habit of making up their own mind about what they want.

So what type of property does an older Australian want in their retirement? When asked by researchers it turned out that most retirees didn’t want to move before they were 65, 75% of them relied on the age pension for their income, most wanted to continue to live in the same community that they had been prior to downsizing, and although they would live in units they wanted to live in small complexs with ten or less properties. Oh and they aren’t too keen, or able to, pay for all those extra fees for the village’s facilities – in fact they are just as happy to continue to use the faclities in their suburb that they have always used. They certainly don’t have the cash to pay for services they don’t want or need. That’s probably why developers who are offering expensive properties – three-bedroom, 2-bathroom is the common configuration, on the urban fringes complete with swimming pool, gym, shopping centre, spa and sports facilities – are having trouble selling them.

You do need to downsize sometimes ...

Several developers have gone bust in the last 12 months unable to continue to service their high borrowings – particularly when potential buyers have had to withdrawal because they in turn were unable to sell the family home at the right price. So if you think a nice little investment in a retirement village may be good idea and you can use it yourself later – think a bit harder. Although the marketing is all around the implied “security” of only living with “your own type” – i.e. other old people – the reality is that most people never consider themselves old. I remember a relative who was adamant she wasn’t old – in her 80’s – we tend not to chose our housing needs based on living with an age cohort. Instead although older people may want to downsize to a more easily maintainable property – they still want to live in the area they know well. I rather suspect that well-maintained units in established areas, which don’t have excessive numbers of stairs or loud neighbours maybe more to their taste.