The Elephant in the Home Market: lack of affordable retirement property
Category Blog
Retirement property as a whole remains a relatively untapped area of the South African housing market. The result is high prices suitable only for a few, and long waiting lists at nearly every facility - be it a retirement estate, village or old age home.
While there are choice options for those with the money - such as two or even three bedroom cottages, 24-hour security, healthcare on tap, club houses, gyms, swimming pools, landscaped gardens, transport to shops and events, etc, there is very little on offer at lower levels of affordability, or even slightly less.
The generation rise:
Baby boomers (not to mention the X-generation stepping on their heels), are taking charge of their old age requirements with more awareness. This is the wealthiest generation to reach old age, and currently on the search for suitable, secure retirement and care homes. But not everyone is in the same financial league, and the dearth of lower level affordable retirement facilities is both a ticking time bomb and a valuable opportunity for nifty developers get in on the ground floor of a property market nowhere near its promising peak.
Granted retirement estates are popping up quite regularly - especially along the coastal areas - but these are all sophisticated lifestyle developments, not really geared for the middle income groups. This type of living does not come cheap and buyers can expect to pay upwards of 3 million for a two-bedroom apartment or cottage, and that's without calculating the levy for numerous services offered, including laundry, cleaning, meals, building and garden maintenance, security, carers, etc.
Multi-generation living:
A counter measure is an increase in multi-generation living; having grandma and grandpa to live-in is a popular choice among some communities who prefer to keep family care and compassion close to heart. In some instances, the younger generation or middle generation is investing in garden cottages or larger houses that can be easily divided, or two houses co-joined. This is often a preferred choice for close-knit families - however, sometimes it is pure desperation because there is simply nowhere affordable for grandma and grandpa to go.
Problem and opportunity:
Life expectancy has increased significantly in the last 2 - 3 decades, and today's earners will soon be joining the property squeeze in the next decade or two, on the lookout for affordable accommodation offering security and a sense of community. Currently, facilities are not keeping pace with the needs of an aging society. In addition, many people are not giving enough thought to the costs of downsizing and the living expenses thereafter.
Those who have studiously managed their money (one family home for 40 years paid off, no holiday homes, expensive overseas trips or speedboats, paid their children's education, invested, saved, done without to ensure they can manage the costs of old age) may find that the family home of 3 bedrooms and two bathrooms and a large, well-cared for garden does not necessarily give them enough to cover a cottage in an established retirement village.
Yet despite prices, retirement property developments are selling out often before building is completed, which gives a sense of the demand and growing urgency. And while the average age group motivated to buy into these developments is around 68, there are young people in their forties looking for secure places for their parents, but with the view to eventually retiring there themselves. Younger age groups are buying for the value of the investment from a rental perspective. And why not? Secure, maintained, and of lifelong benefit.
Get property advice:
To get up to speed, it's advisable to consult the advice of a good estate agent who can evaluate your house, and advise of the best alternatives on the market to suit your finances, expectations and lifestyle - whether buying a smaller home, moving into a retirement village with assisted living, or renting property.
If you have left your decision for too long, and particularly if you need to move urgently, you may find that your options are severely limited. Deciding whether to buy or rent at this stage becomes the main focus. For instance, your primary home could be rented out to fund your retirement living in a smaller house on the coast, thus keeping the main investment intact. But there are always issues to consider with this decision, such as maintenance costs for two homes. You don't want to end up with another bond.
Loneliness and practicality:
The older years often find people on their own. Moving to a retirement village or complex can be a decision chiefly based on loneliness. Compact living space is acceptable when you know you will become part of a community, and assistance will be close by and at the touch of a button. Social engagement is vital for the elderly - so designs for this type of property do not have to reconstitute the original home. Tiny homes are becoming extremely popular worldwide, and studio retirement apartments are highly sought-after by single, divorced and widowed people whose children have flown the nest and they no longer have need of a large home.
Scaling down at the later stages of life should offer good value not anxiety. There is little need for extra rooms, storage space, garages, gardens, etc, when you are wanting security, comfort and companions. Values change and developers should take note of this. Building small could fulfil a growing need, and become big business with the right vision, ingenuity, and financial insight.
Leapfrog Property Group
Leapfrog Property Group offers a fresh and innovative approach to buying, selling, renting and property investments, ensuring the best property deals for clients across South Africa. Our agents are qualified, trained, experienced; our approach bold and spirited, driven by heart, generosity and honesty. It is our mission to advise, eliminate obstacles and save you unnecessary expense. Trust is our watchword. And value our motto. Armed with our combined credentials, we are the bright face of excellence in the South African market.
Author: Leapfrog Property Group
