We all know that Australia’s population is ageing.
But just how fast this is taking place & the magnitude of its impact, can often be lost on us.
How’s this for starters
About 5.8 million people are aged over 55 years in Australia today. This is projected to more than double in size (12.8 million) within the next 40 years. This represents a projected growth rate of 170,000 people per annum (over 55) each & every year between now & the year 2050.
Did you know?
….that within two generations, a third (that’s 33%) of Australians are going to be aged over 55 years old & that close to a quarter (25%) will be aged over 65. It has also been estimated that four million people will be aged over 75 by the mid-2000s. That’s about the size of Sydney’s current total population.Imagine a Sydney comprised of just grandparents, many of whom would be great-grandparents. Whilst many older residents own their principal place of residence, many Australians over the age of 55 years are cash poor.
Did you also know?
….that the latest official statistics show that 60% of our older residents live on less than $430 per week & sadly, 45% largely rely on a government pension or allowance. Moreover, most 55-plus households cannot move into more appropriate accommodation. The high entry & rental costs of the current ‘retirement’ products on the market prevent them from doing so.Many will be forced to age in place.
What a waste!
Two older people – often it is just one old resident – lolling around in a big house (often with three or four bedrooms), waiting for the inevitable. This housing stock – which would suit families and especially first home buyers looking to raise a family – should be more readily on the market. Financial incentives should be in place, maybe, to encourage older residents to sell. More importantly, a wider choice of alternate, affordable (and affordable the paramount word, here) housing stock needs to be supplied.
Assuming that all those aged over 55 years move into a new dwelling, there is a potential need to create over three (3) million new homes across Australia for people aged over 55 years, between now & 2050. This equates to nearly 86,000 new homes across the country each year for this older market segment. Glenn, if you and your RBA chums really want to help get more housing construction underway, then housing our aging population is maybe the best way to go. But more will need to be done than just dropping the cash rate. The appetite for investment product and the momentum behind a lot of the new housing starts across Australia today – is only so deep; remains very cyclical & right now is heavily influenced by unsustainable forces, many of which are beyond our control. Think overseas buying/investment; world-wide deflation and hence (among other things) low interest rates, plus an increasingly deranged mindset (held particularly by property buyers under 35 years) that generic property values will continue to rise exponentially into the future, regardless of the warning signs ahead.
More dyers than buyers
And ageing demographics – not only here but elsewhere in the western world –of the loudest cries heralding that the next 25 years is likely to be very different from the previous quarter of a century. Nothing will be immune – and especially residential property. We may soon be approaching a market place where there are more dyers’ than ‘buyers’.
Aging in place
But as we have already said, many of our older residents will age in place. So the more practical requirement is currently for around 15,000 new retirement dwellings per year, three-quarters of which will be needed in New South Wales, Victoria & Queensland. This market is already quite undersupplied. Our estimates suggest that new retirement housing construction has averaged around 4,000 new starts each year over much of the last decade.
The need to provide affordable retirement accommodation is already acute across Australia & this need is going to escalate in the future. This strong & growing demand presents an opportunity for housing providers to either retrofit existing, underperforming, retirement estates with a better model, or start building new, more affordable projects & estates. It also suggests the need for a lot more retrofitting of older residents’ homes to better suit their needs, plus allowing the independent living of tenants and/or family members. It is little wonder that granny flat construction is on the rise.
Source: Matusik Missive from Matusik Property Insights