So they say, necessity is the mother of all invention. Most human advancement has occurred when a change has compelled us to innovate in new ways.
Today, a generational shift of monsoon-like proportions is in motion as the baby boomers make way for a new X/Y led era.
According to ABS data, average life expectancy for Australian men and women has increased by over thirty years since the late 1800s, to 79.3 years for males and 83.9 years for females born between 2007-09.
At the same time, average fertility rates have been declining since the 1960s and have been below population replacement levels for the last twenty years.
As with most other developed nations, yesterday’s social dynamics are shaping a radically unprecedented demographic shift in Australia’s cultural fabric.
The government’s Intergenerational Report 2010: Challenges and Priorities for Australia, projects that over the next 40 years, the proportion of our population over 65 years of age will almost double to around 25 per cent.
We’re increasingly hearing about the ‘ageing Australia crisis’, as politicians on both sides scramble to find ways of servicing this burgeoning populace with all its additional health and welfare requirements.
Frequently at the heart of the ageing Australia dialogue is how to house a glut of elderly residents with the necessary provisions to allow independent day-to-day living.
Here we see an opportunity for property investors who recognise the changing demographic landscape and note the very real future real estate needs of tomorrow’s tenants.
Housing for the Aged Action Group (HAAG), a number of facts regarding the accommodation status of over 55’s demonstrates a desperate need for an older person’s housing strategy.
While the HAAG is calling on the government to seek solutions, it’s in the private real estate sector where most beneficial change could potentially arise.
HAAG says that today in Australia, people aged over 55…
Make up a significant proportion of the homeless population.
Are increasingly losing their grip on home ownership. The number of older people who own their home outright decreased by 4.9 per cent between 2006 and 2011.
Are increasingly purchasing their home with a mortgage or under a rent buy scheme – up from 14.5 per cent to 17.7 per cent between 2006 and 2011.
The number of social housing applicants increased by 12.4 per cent between 2008 and 2012, while the number of public housing dwellings declined by more than 40,000 between 1996 to 2008, and…
The number of older people renting in Australia increased by 100,826 persons between 2006 and 2011.
Affordable private rental dwellings are a key concern, given that 94 per cent of Aussies aged 65 and over live in private housing, as opposed to nursing homes or other public accommodation.
Per Capita researcher Emily Millane proposes in her paper, The Head, The Heart and The House that a policy mix is required “to adapt current housing stock to longer lives while also developing new housing, particularly for the vulnerable aged.”
Millane cites Anglicare research from 2014 that found couples on the aged pension could afford just 6 per cent of rental properties on the market, while single pensioners could afford just 1.5 per cent of the private rental pool.
In America, where the aged population crisis is even more dire due to the country’s ongoing economic misfortunes and ever widening class gap, landlords and property managers are joining forces to work on ways of accommodating the expanding elderly tenant market.
One anecdotal report tells of a property manager who after conducting thorough due diligence, led a team of concerned investors in the purchase and subsequent refurbishment of a large church building.
The building was repurposed into 12 residences specially equipped for seniors, using capital from various government sponsorships and private organisations.
When opportunity knocks, the wise investor will at least open the door and have a good hard look at what’s presented. Remember, today’s change is tomorrow’s opportunity.
With a combination of low-interest rates and cheap mortgages, plus affordability issues compelling all levels of government to reconsider the developmental policy, Australia’s ageing crisis might just represent the ‘perfect property investment storm’.
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