Clearance rates are falling – this matters to retirement village operators
In recent weeks, auction clearance rates have fallen to 48% in NSW and around 40% in Queensland – the latter not seen since the early days of COVID.
On the back of two successive interest rate rises, market behaviour begins to shift with homes sitting longer; buyers hesitating; and deals fall over.
Experienced retirement village and land lease operators don’t just watch the housing market. They depend on it with the equity release from the family home funding the purchase within their village.
Across the sector, the impact is being felt. Sales Managers are taking calls from depositors whose homes didn’t sell on the weekend. Settlements that were “conditional” only six weeks ago are now being pushed out.
For operators planning settlements prior to the end of 30 June, there are discussions happening about Year End targets and cash flow.
Operators face the difficult decision: extend the settlement time frame with the existing buyer or release the deposit and go back to market.
Demand is not the problem.
In 2024, the Centre for Population projected a 49% increase in the number of people aged 75+ over the next decade. An important number as 75 years old is the average age of entry into villages in Australia according to the PWC’s Retirement Living Census.
At the same time, we are not seeing that same increase in the delivery of new product on the ground.
There are green shoots for supply. As previously reported by The Weekly SOURCE, development activity is building. RSL LifeCare has lodged a $772 million redevelopment at ANZAC Village in Narrabeen. BaptistCare has secured approval for a $2.85 billion project at Macquarie Park.
In NSW alone, 42 State Significant Development Applications involve seniors living and aged care, with 18 already approved.
But pipeline is not product.
Each of these projects will take at least five years to deliver. By the time they come online, the economic cycle will have shifted again. With strong demand, the product on the ground is more valuable.
The sector is more resilient in 2026
The sector has been tested before. Movement ground to a standstill during the GFC and again in 2017 following the Four Corners program that put the model under national scrutiny. Then there was COVID.
Each time, operators had to find ways to stimulate a market that couldn’t move – or didn’t want to move. And each time, the sector adjusted and the product became stronger.
The demand is there, it’s just harder to access. Tougher market conditions tighten enquiries and dampen aspirations to move.
We hear from our colleagues at Villages.com.au that Marketers are engaging with them to be increasingly more tactical with lead generation strategies. They have been monitoring the wider conditions and are adapting accordingly.
Cash remains king
Coming back to the timing of settlements – this is more important in 2026 than in previous cycles.
Operators now face buyback requirements across the country – anywhere from six to 12 months. Settlements are being monitored closely to ensure cash is realised in time to meet legislative obligations to pay out exit entitlements.
Do you carry the depositor, extend time and wait for them to sell? Or do you chance your arm and release the unit, and back your marketing team knowing supply is short and demand is only getting stronger?
It’s a decision based on not ‘if’ the retirement village home will sell, but when you will realise the cash.
And the operators who manage cash well will be the ones who keep moving while others stall.
