Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Lifestyle Communities falls foul of soft Victorian housing market
After facing significant headwinds for most of the 2025 financial year, Lifestyle Communities (ASX:LIC) is showing some early signs of recovery to give investors grounds for cautious optimism.
The trading update for the latest quarter to March 31, 2025, reveals a company – it operates in the land lease community segment, developing, owning and managing affordable independent living communities across Victoria – methodically addressing its challenges while positioning itself for long-term growth in this market sector.
It currently has 32 residential land lease communities in various stages from planning to management, with more than 5,500 Victorians calling these communities’ home.
With an ageing population, it’s a sound commercial proposition. But the past three quarters have been challenging for the company, with sales significantly impacted by negative media coverage in July 2024 and the broader softening of Victoria’s residential property market.
Net sales dropped from 65 in the last quarter of 2024 to just 21 and 20, respectively, in the first two quarters of 2025. But the March quarter has shown promising signs with net sales increasing to 50 despite continuing market challenges.
The ABC media report detailed complaints by Lifestyle Communities residents about fees they believed were excessive and in breach of the law to the Victorian Civil and Administrative Tribunal (VCAT), prompting an eight per cent drop in the share price to $11.60. The shares closed on Tuesday at $7.23, down 39 per cent for the year and only up 11 per cent for the past five years.
Following the report, Lifestyle Communities confirmed to the ASX it had been engaging with a group of residents since February who have now approached VCAT. It rejected the allegations made in the VCAT applications and said all fees had been clearly articulated. The VCAT hearing is scheduled for next month, with the company’s third quarter market update saying it remained confident of its position.
Under newly appointed chief executive officer Henry Ruiz (pictured), the company is making tangible progress on its strategic priorities.
First, it has reduced its excess completed home inventory by 22 per cent, bringing the total unsold inventory homes to 242 by March 31, 2025, down from 269 at December 31, 2024. Additionally, unsold homes under construction have been reduced 34 per cent to 59.
Second, it is strengthening its balance sheet by releasing between $80 and $100 million in land sales. The company has already executed its contractual right to exit the Warragul contract, which will return $18.75 million by December 2025. Furthermore, indicative non-binding offers have been received on two sites, with heads of agreement signed and due diligence underway.
Third, it has completed 190 new home settlements this financial year and holds 279 deposits for future settlements. Of these, 122 homes will be available for settlement in 2025, with 157 scheduled for 2026 and beyond.
These promising signs, notwithstanding, Lifestyle Communities still confronts a challenging Victorian residential property market, with several factors likely to keep sales rates subdued in the near term:
– Seasonal weakness typically seen in the fourth quarter.
– Easter holiday period affecting buyer activity.
– Upcoming federal election creating market uncertainty.
Despite these short-term challenges, the fundamental drivers of demand for affordable retirement living options remain strong. Australia’s ageing population, coupled with financial pressures facing retirees, creates a solid long-term opportunity for its value proposition of helping homeowners downsize for lifestyle and financial reasons.
Executive chair David Blight summed it up succinctly when describing the first half of 2025 as “challenging”.
“But we’re pleased with the progress made by the team to position the business to navigate a period of lower sales in the near term,” he added. “We remain disciplined in our approach and will continue to make changes as appropriate to navigate these headwinds and position the business for when the cycle turns.” Until there’s further evidence of that cycle turning, investors are holding their fire.
