Understanding the Dynamic Behaviour of the Australian Retirement Village Industry: A Causal Loop Diagram

Abstract

The retirement village industry in Australia has been accommodating an increasing number of residents in recent decades. However, a thorough understanding of the dynamic behaviour of the industry remains largely unknown, which prevents a better prediction of its future growth. This study incorporates system dynamics thinking into residents’ relocation decisions and aims to develop a causal loop diagram to have a full understanding of the complex interactions of variables affecting their relocation, which in turn determines the future growth pattern of the industry. Based on thematic analysis using literature review and interview data, five primary causal loops are identified, including the positive reinforcing loops of word-of-mouth effect and new-supply effect, and three negative balancing loops of the move-out effect, price effect and home-village distance effect. Of these five causal loops, the most dominant ones in determining the system behaviour are the word-of-mouth (reinforcing) and home-village distance (balancing) effects. The causal loop diagram provides a better understanding of the underlying structure of the retirement village industry and will help guide the industry and policy makers in formulating strategies to create a more ageing-friendly living environment for seniors in Australia.

Understanding Spatial Distribution of Retirement Villages: An Analysis of the Greater Brisbane Region

“…According to Stimson and McCrea [28] and Xia et al [29,30] most residents choose to move into those retirement villages within or close to their current suburbs/communities due to the word-of-mouth impact so as to maintain social connection and engagement with existing friends, neighbors, and family members. As a result, the retirement village developers need to cater to such needs of their customers and choose to locate retirement villages for individual suburbs when the older population is large enough to support the business, rather than building large scale retirement villages in one location to serve customers from various suburbs.…”

Sustainable and Equitable Land Management

“…Causal loop diagrams, like the example in Figure 2, are a technique from the research field of system dynamics. For instance, Xia et al (2021) use causal loop diagrams to better understand the complex interactions of variables affecting the migration of the elderly in the case of retirement villages.…”

The third age interrupted: experiences of living in a retirement village during the first year of COVID-19 in Victoria, Australia

“…The design of retirement villages also accords with third-age aspirations for autonomy and the construction of a self-identity outside work and family roles. Ideals of independence and individual choice are highly valued and promoted by providing residents with their own private units or apartments (Shippee, 2012), while allowing them to downsize to a more manageable living space than the traditional family home (Gardner et al, 2005;Productivity Commission, 2015;Bevin, 2018;James et al, 2020;Xia et al, 2021). Retirement villages may also foster a sense of community by bringing together individuals in similar lifestages.…”