"There are some 7 million Australians over the age of 50, and while that is around 32% of the population they control 68% of the wealth."
How Australia's ageing population will affect residential development
As we start 2013 I want to briefly return to all of the various themes that I think will be key issues for project marketing professionals this year, starting with one key aspect of demographics. In particular how we will need to continue to take full account of Australia’s ageing population.
I think we always need to keep the spotlight on this topic because from how projects are designed and then taken to market, demographics are central, and the impact of an older market is now a reality. One key issue is as baby boomers move into retirement how it’s going to directly shape many aspects of our work.
To start this topic I would firstly like to relay some published figures to help clarify why this aspect of demographics will be important.
Today (according to the ABS) there are some 7 million Australians over the age of 50, and while that is around 32% of the population they control 68% of the wealth. Clearly how this group spends money and invests is a core part of the economy and this includes the housing market at its heart.
However, there is already a robust discussion taking place about how baby boomers might plan their retirement, and possibly not surprising, after the GFC the number planning to work until they are 70 has greatly increased. This could make the employment outlook more complex.
One reason for this is understood to be the gap between retirement savings, including retirement savings, and the amount needed for a comfortable level of retirement income. For many people this reality may well involve a detailed consideration of if and when the family home might be sold, to help fund retirement plans and future health care. However there is some divergence here because there are many benefits now attributed to living at home including the wider use of home based health care.
As a group older Australians are enjoying better health and now as we live longer for a couple aged 60 today, there is (according to the ABS) every chance that one will live beyond 90.
In a report Surviving Longevity published by Rice Warner we can find a clue as to how housing options might change between the ages of 60 and 90 and hence how this group will be relevant to how some projects are planned and then sold.
The report suggests three stages of retirement, which is summarised as ‘active’ from 60-65 to 75, ‘passive’ from 65 to 85 and ‘frail’ from 75-85 and beyond. I think it is already established that during these stages how and where people choose to live will and does vary.
If, for example, in the first ‘active’ phase there is a desire to get out and about, with travel and hobbies more a priority, thus it may well be the ideal time to sell the family home and downsize. According to a report produced by the MLC 49% of people are looking forward to their retirement, and this already apparent trend may well start to escalate in 2013.
From only a brief look at this one topic there are many other aspects of the market that could be directly impacted, these would include investor demand, apartment design and amenities, changes to infrastructure and changes to tax policy, with the later already being a reality when it comes to superannuation.
As usual demographics are as always an interesting topic, and I will continue to look at other key factors for 2013 during January.Peter Chittenden is managing director for residential of Colliers International.