The Federal Government is forecasting 4,000 new residential aged care beds to come online in 2026-27, but questions remain whether the sector can keep pace with demand as Australia’s over-85 population surges.
A spokesperson for the Department of Health, Disability and Ageing told The Weekly SOURCE the Government is “working with State and Territory Governments on options to stimulate capital investment in residential aged care.”
5,700 beds due in next two years
“Alongside improved sector financial performance, residential aged care building activity is increasing, with the Financial Report on the Australian Aged Care Sector 2023-24 (FRAACS) reporting 232 new building approvals for the sector, compared to 224 in 2022-23,” they said.
“While it’s not possible to confirm the specific number of new beds that will be built this financial year, sector intelligence available to the Department indicates the number of new residential aged care construction projects currently underway.
“Nationally these projects are expected to generate in the order of approximately 1,700 new beds in 2025-26, and approximately 4,000 new beds in 2026-27.”
The Department noted the sector had reached “its lowest financial point” in 2021-22, following the Aged Care Royal Commission and the COVID-19 pandemic, which saw multiple facility closures. Since the introduction of AN-ACC, it said, financial performance has “steadily increased” and closures have slowed.
“Overall, there was net increase in the number of operational aged care places that became available in the last 12 months,” the spokesperson added, pointing to over 10,000 new operational places since June 2020.
Demand is outpacing supply
The figures, however, raise concerns. There were 224,000 operational aged care places in 2023-24. Even with 1,700 new beds in 2025-26 and 4,000 in 2026-27, that’s just 5,700 places – an increase of around 2.5% over two years.
Compare that with ABS projections showing the number of Australians aged 85 and over has grown by 80,000 to 100,000 since 2020 – an increase of 15-20% in just five years. You do the maths.
The numbers also don’t account for closures. As The Weekly SOURCE reported earlier this year, 10 residential aged care homes closed between January and November 2024, resulting in the loss of 769 beds.
Over the same period, 2,022 new beds came online through new facilities, leaving a net gain of just 1,253.
A looming shortfall
Analysis suggests the gap will only widen. StewartBrown estimates the sector will require an additional 40,000 beds by 2030 – equivalent to 8,000 new beds a year. Current forecasts fall well short of that.
The Department says it is seeing “an uptick in capital expenditure (as reported by providers), and anecdotally there is now more sector confidence due to both improved financial performance and greater regulatory certainty.”
But as I reflect, this confidence is now at risk, with operators warning that the Government’s clawback on AN-ACC funding will hurt their development pipelines.
The question remains: can the sector be investable enough to unlock the capital needed – or will Australia’s ageing population continue to outpace the beds being built to house them?