Like-for-like comparison favours retirement villages over general residential homes
The Property Council of Australia has unsurprisingly and eagerly endorsed the findings of University of Technology Sydney research on the benefits and affordability of retirement village living.
The Property Council of Australia has unsurprisingly and eagerly endorsed the findings of University of Technology Sydney research on the benefits and affordability of retirement village living.
Lois Towart’s research, which was released by the university last a week, compared living in a retirement village to general residential home dwelling in nine locations around Australia.
She found that while the ownership costs of a house are lower, the real savings are provided through the lifestyle services included in retirement villages plus intangible benefits such as an increased feeling of security.
Ms Towart, who was recruited to UTS to lecture in asset and valuation courses in the School of Built Environment, has a professional background in real estate, valuation and fund and asset management in the aged care property market.
She used her recent sabbatical to produce this rigorous report “comparing apples with apples” on the retirement village industry, which was under the media spotlight for much of the period.
“I was encouraged to go public with my data but refrained so as to present a full picture of the industry in my final report,” Ms Towart told Australian Ageing Agenda.
She obtained valuable deidentified data from the PwC Property Council Retirement Census and then spent a lot of time obtaining and analysing specific comparable local data for each of the nine locations.
The villages varied in location and ownership but all represent medium density development or vertical villages and were established from around 2000.
“The results are based on a like-for-like basis of financial and lifestyle components of retirement living including entry price, ongoing costs facilities and services, exit prices and intangible factors, all of which may be considered by seniors making the choice to live in a retirement village,” Ms Towart said.
“Retirement village living is neither cheaper nor more expensive than general residential, [however] it is more appropriate, particularly taking into account intangible factors such as security, companionship and peace of mind.”
She said the retirement village market was is quite nuanced with marked regional differences.
“Entering a retirement village, and exit fees should not be regarded the same as a property purchase where capital growth is guaranteed or expected,” she said.
“A resident is entering into an agreement that gives them lifestyle and amenity factors, which provide the return.”
Ms Towart said she was keen to update the study in a few years because differences in senior’s experiences and expectations could markedly change residential choice.
IT usage, which she is researching separately, can change village residents’ experiences, she said.
“Retirement village managers tell me they’re seeing more and more Coles and Safeway food deliveries in their villages. Residents are going online for convenience rather than having to organise trips to the supermarket. They really like that the deliveries are made right into their kitchen, saving them the bother.
Property Council of Australia executive director retirement living Ben Myers said critics of retirement villages were “quick to point out the cost of leaving a village, but this research shows the cost of living should be measured much more broadly than by just looking at exit costs.”
Access the report here.
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Groan…. REALLY?
I read this report as I not only have designed Retirement villages, but have just had my parents leave a 10 year tenure in an upmarket SA village and go into Aged Care. Sorry, I don’t agree with either the methodology or the conclusion.
A few points.
In principal I agree that living in a retirement village will provide easier access to both services and community that comparable General residential living will not. It does add to a quality of life once you are finding travel more difficult and perhaps no longer own a car.
What I disagree with is the myriad of assumptions made to calculate the values and the statement that “Residential Living is neither cheaper nor more expensive than General Residential”. This is only true because of the figures chosen and as we all know statistics can be bent to prove a point. Where was the survey of residents showing how many services residents accessed each month? Instead I find a lot of guesses with costs put against them. Visiting on separate occasions a gym, pool ,bowling green, craft room, library, community center and Men’s shed once a week is a pretty active life. These were the figures used to add up the true cost and value of a retirement village offered. The small section of retirement villages selected is also an issue.
What about the problems with exiting a village? Money was mentioned, but what abourt emotional stress caused by the exit? Marketing fees & lack of control over the marketing, when and if open inspections are held and eventually accessing the invested funds will not be dealt with here, but let me assure you that the process is much more painful, protracted and complicated than if you were to sell a house that you owned. I see no figures on the emotional distress caused by the exiting process. Can a value be put on that?
This survey only compared buying into a medium density vertical village and apartment living. It did not compare single storey residential villages to Torrens titled houses with land. What if you didn’t decide to sell up and just stayed where you were? What if you demolished & subdivided your existing houses land and built 2 and sold one and stayed in the other? So many other options and so many of them giving far more profit to the General residential scenario over that of Villages.
Perhaps the author could examine the total value of the transfer of capital wealth from these retirees to village operators and provide a true picture of the cost of “the lifestyle services included in retirement villages plus intangible benefits such as an increased feeling of security”.
The Property Council exists to support Property Developers so yes, it is unsurprising that they are supporting a relatively new expanding property sector influenced by an aging population
Having spent some cinsiderable time looking at a few different retirement villages , interviewing residents, reading contracts and talking to a legal advisor I decided that retirement villages, while suiting some residents’ lifestyle, are primarily designed to make as much profit out of residents as possible. These properties are not owned by residents but are only a licence to occupy the residence. All the residents’ money is tied up in, what is for them by any standards, a bad financial investment. If a resident decides to exit the village, in the majority of cases, they cannot afford to buy another residence.
I would advise anyone thinking of entering a retirement village to do thorough research and be absolutely sure that they are comfortable with all the risks inherent in this system, given that rorting is not uncoomon.
I just found a really good calculator comparing costs between Retirement Village and General living. Figures were all on the high end of charges that may be made by village operators, but before you add in the intangibles and the cost of those lifestyle services the return on a $750k like investment after 10 years yeilds around $400k for a Village unit and around $1mill for general living. Surely services and intangibles aren’t worth that much?.
Apples for apples? Really?
Everyone knows that most people would rather chew off their right arm than choose to live in a residential facility. And The Property Council know that too. So too do developers. Oh my word they do.
So did Ms Towart’s research include interviews with people in retirement villages with pulmonary heart disease and ‘through the roof’ in home support bills, with late stage dementia or with a wife who was at wits ends because her husband is now in care – 20 kilometers away – and she can no longer drive to be with her beloved as often as she wants? Family live interstate.
We need to stop this madness that exploits a ‘peter pan’ mentality – not wanting to face the (common) realities of age.
We don’t need more fancy retirement villages where there is not a high care bed within cooee.
What we need is to develop MULTI TIERED accommodation choices for retirees. Choices that minimize the shock of transition if or when age or disability turns a life upside down. Market and advertise that as a ‘glossy’ choice.
And we need more appealing residential care scenarios. Boomer friendly high care hubs, if you like.
Grant Lucas I agree with your every word and your sceptisim.
We need to stop presuming to compare apples to apples and start looking seriously about how to offer quality retiree and end of life accommodation options.
That would be more fruitful.
Felicity Chapman
Clinical social worker, lecturer and author.