_Australian Retirement Living Penetration Rates

Using newly released data derived from the 2016 Census, the current penetration rate across Australia measures approximately 6.0%. By state, penetration rates are greatest in Qld, SA and WA at 7.9%, 7.7% and 7.5% respectively. For Qld, the high penetration rate is underpinned by solid growth in Net Interstate Migration as persons aged 65+ from NSW and Vic head north. Despite NSW and Vic having the largest overall number of people living in retirement villages, penetration rates in these states are considerably lower at 5.4% and 4.7% respectively.

At a capital city/regional level, penetration rates are marginally higher in the combined capital cities when compared to regional and coastal locations. To some, this may come as a surprise given the ‘sea change’ and ‘tree change’ migration phenomenon; however, proximity to family and existing social networks are equally important in a retiree’s decision to locate to a particular area. Notwithstanding this, the migration of persons aged 65+ to coastal and regional locations remains significant with certain coastal pockets around Australia having a retirement living penetration rate in excess of 14.0%. In addition, between the 2011 and 2016 Census periods, 63,790 persons aged 65+ moved from capital city locations to regional and coastal locations, freeing up capital to fund retirement from the sale of the family home.

For NSW, the northern coast is a dominant retiree location with LGAs including Port Stephens, Tweed, Central Coast and Port Macquarie-Hastings having penetration rates of 13%+. Alternatively, the Qld’s Sunshine Coast, Logan, Fraser Coast and Moreton Bay LGAs have proved to be popular locations for retiree households with penetration rates ranging from 10.2% to 13.6%. Notably, these locations have benefited from Net Interstate Migration from both NSW and Vic where between the two most recent Census periods (2011 to 2016), 11,277 persons aged 65+ moved to South East Qld from the southern states.

Looking specifically at Sydney, the northern suburbs of Sydney have the highest proportion of the 65+ population living in a retirement village (See Map 1) . The Northern Beaches in particular has proved to be a popular location amongst retirees given the access to lifestyle amenities and medical facilities. 

Despite having a large number of 65+ age households, the inner west and central west of Sydney appears to be under represented in regards to retirement villages with a low proportion of 65+ living in a retirement village. Notably, this is a feature of a lack of supply rather than demand as the availability of suitable retirement product being a key factor in determining penetration rates. Strong demand for residential uses in this area has also been a dynamic in the lack of supply as retirement living operators have struggled to secure sites when competing with residential developers.

With the recent release of the 2017 PwC/PCA Retirement Survey highlighting that the majority of existing retirement villages are operating close to full capacity, more villages are needed to accommodate Australia’s ageing population. At the same time, it is likely that penetration rates will increase which will result in a greater number of independent living units required to satisfy demand. While this represents a significant opportunity for both current and future operators, this underscores the need for more retirement villages to be built in areas of low provision.