Retirement flats have been a miserable investment say retirees
MELBOURNE: An apartment block for retirees has sprung up nearby. A banner announces that units are selling like hot cakes. It features a photo of three smiling oldies raising wine glasses on a sun-drenched terrace. Only a wisecracking Italo-American granny is needed to recreate a scene from the 1980s TV sitcom The Golden Girls.
In the past, someone might have driven past thinking: “That would do for mum/dad/me (when the time is right).” Fewer of them think it these days. Retirement flats have acquired an unenviable reputation in the UK.
“There have been a lot of horror stories in the media about people who have been left with sizeable ongoing costs [on an apartment] although their loved one no longer lives there,” says Jeremy Porteus of the Housing Learning and Improvement Network, a membership organisation.
The other issue is hefty drops in the resale value of some new-build retirement flats.
I only became excited — and I use the term advisedly — about retirement flats when I had trouble obtaining price data. Four decades in journalism have taught me that when potentially damaging financial information is scarce, it may mean an industry wants to keep it that way.
So I sat down and knitted my own data from the raw yarn of price histories for individual retirement flats published by Zoopla, a housing portal. I was shocked by what I found.
First, I should explain the focus of my toil. I investigated apartments in purpose-built blocks created, for the most part, by private developers. These buildings have an age threshold for residency and facilities ranging from a few shared spaces to resident wardens and on-site restaurants. The flats are leasehold properties, a form of tenure the government may ban or at least restrict.
I found that over the past 26 years the retirement flats in my sample rose by an average of just 2 per cent a year in nominal terms between first and last sale price. That is pretty dreadful. Consumer price inflation has been higher and has itself been healthily outstripped by growth in prices for dwellings of all types.
Prospective price increases — the gap between first sale and prices currently advertised by owners — are typically even lower than realised price rises for the same properties. This reflects a weakening in the market for retirement flats in recent years. Averages conceal some individual shockers. Price drops of 30-40 per cent are not unusual.
Caveats apply to my home-knit numbers. Many price histories were incomplete and my sample was accordingly limited. Moreover, many flats that I included started as new-build properties. Prices for these tend to fall for a few years after the first sale, which makes comparisons with general property prices imprecise.
Fortunately, a comprehensive study conducted in 2025 by Gus Wiseman, a Cambridge university real estate master’s graduate, confirmed the price underperformance of retirement dwellings. He also showed that new-build retirement flats lose value at twice the rate of other new builds after five years or so.