A looming new housing crisis
ALREADY at grave levels in the Western Cape, the shortage of housing could soon produce a new crisis: a deficit in accommodation for the elderly.
The number of people over 60 years of age is growing significantly and is expected to double by 2050. Statistics SA says the percentage of South Africans older than 60 increased from 6.61 percent in 2002 to 8.01 percent last year.
In the Western Cape, women make up a significant majority of the older population because of longer life expectancy.
Statistics show that, in recent years, the number of older persons versus every 100 children born in the province has increased. This is mainly the result of improved medical knowledge, better access among the more affluent to sophisticated medical care, and a greater focus on healthy eating and fitness.
The trend has significant implications. Social security and private pension funds will be stretched, medical services will be under pressure, and the massive shortage of retirement accommodation will be exacerbated.
The state will be under pressure to address the need for retirement housing, a daunting task considering the lack of housing in general.
Where accommodation specifically suitable for the elderly is concerned, the property development industry has fallen behind. It is only more recently that the industry has started building the sort of retirement lifestyle villages that have long been available in the US for the middle-class retired population. Because these developments were not done 20 or 30 years ago, the demand for accommodation currently exceeds the supply, and it is likely to get worse as the generation of people now in their 40s and 50s gets older.
A further consideration is the affordability of retirement accommodation. Even those who have had steady employment throughout their working lives are often not able to retire in a financially strong position, and so developers are finding that they have to come up with flexible payment options for people who want to live in retirement villages.
There are two elements of the costs that people must consider. The first is the capital outlay for the purchase of a unit in a retirement village. Prices vary considerably based on the nature of the village and the accommodation, from about R1 million up to perhaps R4m. Unlike the cost of a sectional title unit, the pricing for a life right – a model becoming more common for retirement accommodation – can be adapted to suit the purchaser, particularly someone who does not have access to the full capital amount of the purchase price.
With life rights, a purchaser can offer a lower amount, and the difference between the price and what is actually paid is recovered by the developer when the unit is resold after the buyer passes away.
The second component is monthly levies. These cover many of the expenses someone living in their own home would have to pay for, such as security, mainten- ance of the building and garden, the use of a gym and swimming pool, basic medical assistance and municipal rates.
Over time, levies will increase with inflation, so the purchaser should be prepared for this. Buying into a large retirement village, such as the Evergreen Lifestyle Noordhoek Village, with its 150 houses and 200 apartments, is something to consider, because the levies are less likely to increase as much. When one has more residents sharing the costs of maintaining and running the village, the costs per unit will be kept down.
With so much to consider, planning by both the industry and families is crucial. Arthur Case is the chief executive of Evergreen Lifestyle, a provider of retirement accommodation in South Africa.
Arthur Case, the chief executive of Evergreen Lifestyle.