As teenagers they invented pop culture and now—much older, collectively wealthier and arguably wiser—they are defining a new age group and re-inventing retirement living.

Millenials may have surpassed them in numbers but baby boomers are still having significant influence on world economies and trends—not least in the property market.

“The baby boomers are coming through and have become a force for change in the seniors’ market,” said Cameron Kirby, managing director of Kirby Consulting Group, a retirement and aged care specialist.

“The more progressive operators are definitely getting their ducks in a line.

“And there’s a lot of developers interested in dipping their toes in the market for the first time, some of them with more than 30 years’ experience in the development industry, because they can see there is huge opportunity.

“[But] many developers that want to enter into this space are probably a bit reticent because they’re worried about the complexity of it, they’re worried about the unknowns.

“The opportunities, however, far outweigh any of their concerns.

“And if you’re offering what the market wants, you’re going to be successful.”

Kirby will be a speaker at The Urban Developer Developing For An Ageing Demographic vSummit on April 28.

“The sector is continuously changing,” he said.

“You’ve got land lease communities and over-55 developments that have been moving into the traditional retirement village space.

“And, at the moment, there’s a lot of talk about integrated care in retirement living with a greater weighting on having more retirement villages and less aged care.”

Last year, a survey by benchmarking firm StewartBrown showed 58 per cent of aged care homes were operating at a loss, up from 55 per cent the previous financial year, and 32 per cent made a cash loss.

“Aged care has got some major challenges … but in the meantime there’s also the baby boomers coming through,” Kirby said.

“What I’ve seen over the last 10 years is a bit of a slide where low-care people that used to go into aged care are more likely to go into retirement villages and, equally, people that used to go into more traditional retirement villages are now probably more interested in moving into land lease communities and over-55s concepts.

“Land lease communities are growing very fast and are hugely attractive, there’s no doubt about that … but retirement villages have upped the ante enormously as well, they tend to offer much more wellness and are moving more towards the care side of things.

“Certainly, operators who are offering care in retirement villages are going from strength to strength.

“But those retirement living operators that have a full continuum of care solution that’s what the market is demanding … [the boomers] know they’re going to need some support down the line so they’re planning for their future.

“It really doesn’t matter, however, whether you’re doing aged care, retirement, over-55s or land lease community … because demand is outstripping supply. There is a market for all of those and they attract very different types of buyers.”

Kirby said given Australia’s ageing demographic, the seniors and retirement market was a “much more defensive proposition” for developers.

“Just as healthcare is a defensive stock on the stock market, I think seniors living is a much more defensive play in the property sector,” he said.

“It tends to be more needs driven than what a straight-out residential property play would be.

“And so, I think if we are going to be headed towards a softer property market this is an area that can really shine because seniors will still have the wealth and will still want to move and look at downsizing opportunities.”

Article Source: www.theurbandeveloper.com

The price growth of apartments continues to lag rocketing house prices in many suburbs across Sydney and Melbourne, with the trend showing little signs of abating.

The widening price gap between houses and units is a long-term trend driven by land scarcity in our biggest cities, with the difference tending to be widest between houses and high-rise apartments.

The gap between house and apartment prices in Brisbane is now the widest in at least two decades, but is set to shrink over the next 12 months as housing affordability bites and buyers choose cheaper options, Colliers says.

Colliers residential director Queensland, Andrew Roubicek, said the price difference between houses and apartments in Brisbane has reached 45 per cent compared with an average of around 20 per cent between 2003 and 2015.

Brisbane house prices further escalated with the onset on COVID-19 when people placed a higher value on privacy with interstate migration to the Sunshine State also propelling Queensland’s property market.

Property data company CoreLogic estimates that Brisbane house prices increased 32 per cent in the year ended March 31 compared with 15 per cent growth for units over the same period.

CoreLogic said house price growth is slowing faster than units and Mr Roubicek predicted that Brisbane apartment values will rise by “at least” another 15 per cent in the next 12 months.

Mr Roubicek said rising construction costs have hit the new apartment market hard and that comparable established stock costs about 25 per cent less.

“There have been several examples of new developments achieving pre-sale [targets] only to have developers refund deposits and tear up contracts because building costs escalated to a point where it was financially unviable,” he said.

“As a consequence, developers who are looking to acquire new development sites are forced to increase their projected sales prices by around 20 per cent.

“Just 18 months ago a two-bedroom apartment in Brisbane might have sold off the plan for $9000 per square metre.

“But to build that apartment today the developer would need to achieve a sale price of $11,000 per square metre for the project to stack up.”

He said as result new stock is selling slower than established units, a trend that will play out through the rest of this year.

“The market is coming to terms with those newer prices and are seeing in the short-term better value for money in the established unit market.”

He said it is a similar scenario to when GST was introduced in 2000.

“When GST came into the market overnight the cost of housing went up 10 per cent and put more demand into the established market, where the prices of stock grew and the difference between new and second hand became narrower.”

Mr Roubicek said he believed the record price gap between houses and apartments will contract through the year.

“If you believe in history, if you believe in charts, and take a long-term view you would have to think that gap is going to narrow because everyone’s talking about affordability, everyone’s talking about interest rate movements,” he said.

“Natural forces will push what would have been a buyer of a detached home back into the unit market because of affordability.”

Article Source: www.afr.com