These apartments have gone up nearly $100,000 in a year
By Rachel Lane
The latest Retirement Living Census has revealed the most dramatic jump in retirement village prices in more than a decade, with the average price of a two-bedroom independent living unit increasing 16.5 per cent in 2024.
In December 2023, the average two-bedroom independent living unit was priced at $559,000. By December 2024, that figure had leapt to $651,000 – an increase of nearly $100,000 in 12 months.
There are very few options at the affordable end of the independent living unit market.Credit: Louise Kennerley
Three key factors appear to be behind the surge.
First, supply is tight. National vacancy rates sit at just 4 per cent, with Western Australia the lowest at 2 per cent. Waiting lists are the norm.
Second, the market has an increase in luxury developments. In Melbourne, a two-bedroom apartment at St Clare in Kew sold for $2.75 million, while at The Watermark Residences on Sydney’s lower north shore – tucked between Lane Cove National Park and a golf course – two-bedroom apartments are selling for about $3 million.
Third, there are very few options at the affordable end of the market. Just 3.9 per cent of village homes are priced low enough to qualify for Commonwealth rent assistance – meaning a purchase price of $258,000 or less.
Despite the steep rise, retirement villages remain more affordable than the broader housing market. On average, an independent living unit costs 59 per cent of the median house price in the same suburb. Sydney metro has the cheapest units at 48 per cent of the median house price, while Tasmania’s are the most expensive, averaging 85 per cent of the median house price.
Of course, purchase price is only one piece of the puzzle. The average exit fee remains steady at 33 per cent, with the majority (75 per cent) calculated on the purchase price.
What has changed over the past decade is how capital gain (or loss) is shared. In 2015, 26 per cent of contracts didn’t share capital gain with residents; in 2024, that figure has jumped to 65 per cent.
Renovation costs, which often go hand in hand with capital gain, are also rising. Last year, 57 per cent of units in villages more than 16 years old required renovations of $40,000 or more; this year, it’s 63 per cent. The proportion of renovations costing over $80,000 has also grown, from 28 per cent to 33 per cent.
Another key trend is provision of care: 63 per cent of villages now provide home care services, and when you include those who partner with external providers, 79 per cent of villages are delivering some level of care. This reflects the reality of residents staying longer and villages increasingly becoming places where people can “age in place”.
While census averages provide a snapshot of the sector, the reality on the ground is far more diverse. Retirement villages range from small communities of six homes to large estates with more than 600. Purchase prices span from $50,000 to more than $5 million, and exit fees vary from zero to 100 per cent.
Ultimately, retirement villages come in all shapes and sizes, catering to a variety of lifestyles, financial circumstances and care needs. They’re not a property investment, but a lifestyle choice. The best way to know if a village is right for you is to do your homework – compare contracts, understand the costs, and most importantly, spend time in the community to see if it feels like home.
Rachel Lane is the author of Downsizing Made Simple, a book and website aimed at demystifying downsizing.
- Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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