‘Miserable’ can be the only way to explain the growth in retirement village home values over the past five years. The latest Retirement Living Council/PwC Census reports that across 55,335 village homes, their value only increased 4% in 2021 versus a CoreLogic national average of 22% for residential homes.
A two-bedroom village home shrunk to just 55% of a local median house value, compared to 67% in 2020. Does this mean lower demand is forcing down prices – or are village marketers and salespeople weak in asking for more cash?
More likely both are correct.
65% of villages are older than 25 years (built pre-1998), often yellow or red brick and smaller roomed compared to the open plan of today. They are simply less appealing when sold exclusively on the downsizing value proposition.
They also have a buyer self-perception problem. If I am selling a home for $1 million, do I want to trade down to a $500,000 home or say an $800,000 home – I will take the $800,000 home for my last 10 years thanks!
But village marketers and salespeople are weak when marketing the sizzle, and asking for more.
Why? Because often this is not their real job. Marketing is given to a HO admin person and sales to the village manager – who is looking after 100 ageing residents, each of whom every day is a ‘client’ to be responded to (it’s the village residents who pay their wage).
Neither executive gets a bonus or credit for a price lift, but they do get criticism if they have empty units. So why make price a barrier to a customer buying?
But it is false economy. Less price growth, less revenue and profit to the operator, less cash to reinvest in the village and residents (meaning no new bus this year!).
Villages.com.au
On our dedicated villages web directory, villages.com.au, we charge a flat $1,000 a year to carry a Promotional Listing.
Nearly 700 villages decline, usually saying it is too expensive. They would prefer not to be found by the 100,000 people a month who search for a village on our website.
It doesn’t make sense. But it has been the same since 2005 when we started.
The professional marketers however are working their listings every quarter with us – it’s non-stop activity.
Meanwhile owners – both the village owner and the residents – lose out as revenue is lost and less is reinvested. A downward spiral of prices and positive sales – see next story.
