Strong wealth and a growing proportion of Australians approaching retirement age will see the delivery of more luxury residential aged care offerings in the next five years.

While a $550,000 cap exists on the amount residential care providers can charge for a refundable accommodation deposit (RAD), the number of applications made to price above this threshold increased by 74.7% across Australia in the year to June 2017.

Since the implementation of price restrictions on RADs, Western Australia has had the third highest number of rooms approved to charge above the cap of any state at 1,365. The only states with more approvals – by a large margin – were NSW (10,835 rooms) and Victoria (5,743 rooms) with both states experiencing substantial house price growth in recent years.

Compared to Queensland, Western Australia has half the amount of people under the age of 70, yet close to twice as many rooms priced above $550,000.

Elevated housing prices in Australia’s most populous states of NSW and Victoria have led aged care providers in these states to increase the prices charged for RADs to compete with investment across other industries. However, this explains little of the difference between Perth and Brisbane.

Around 95% of residential care rooms priced above $550,000 are in capital cities. Median house prices are comparable across Perth ($555,788) and Brisbane ($546,043). Likewise, median unit prices for both capital cites hover around $375,000.

So, what’s driving the difference?

Despite there being parity across Perth and Brisbane dwelling prices, Perth prices show considerably greater variation, with median local government area (LGA) prices ranging from $375,000 to $3.4 million. The strong variation across Perth’s housing market gives rise to more valuable and lucrative locations that warrant a higher price tag at a cost.

Greater variation in the Perth property market means residential aged care providers need to understand the impact location has on their value proposition. Simply looking at macro factors across the nation, state and even city may offer little help in developing a clear growth strategy.