Housing Decisions of Older Australians

Productivity Commission, December 2015

The Productivity Commission has released a report on Housing Decisions for Older Australians, adding to the growing body of Australian based research on population ageing and related housing and financial concerns.

The report explores the dual nature of housing as both a place to live and a major investment asset, and the implications this has on housing decisions.

The report examines existing policies affecting age-specific housing, the role of the tax and transfer system on housing decisions, and the issues surrounding home equity release to support living standards in retirement.

It was established that older Australian home owners on low incomes could improve their retirement living standard over the remainder of their lives by drawing on their home equity. Financial equity release products could facilitate withdrawal of home equity to fund retirement expenses, however, this market is small and unlikely to grow as older people are reluctant to tap into their home wealth.

Further findings include:

  • Preference for ageing-in-place. For many older people the attachment to the family home is the desire to remain in the local community.
  • Size of property is not necessarily a problem for older residents: About three-quarters of those aged over 75 live in detached houses and a similar proportion have residences with three or more bedrooms.
  • Most older Australians will not downsize during retirement, even though this is presented as a win-win for older people who struggle to maintain their property and also wish to release some equity to supplement their income.[RG1]  The primary reasons are:
    •  a strong desire to age in place; and
    • a lack of suitable downsizing options.
    • Older renters are a significant and vulnerable minority, more reliant on public housing than younger renting households. Renting in older age is associated with potential risks, including poverty, homelessness and adverse impacts upon mental health and wellbeing. Social housing could provide a lower cost and secure tenure option to older people who are forced to rent.
    • Residential aged care is transforming into an end of life option, with the average age of 83 for admission, higher care needs to those in care, and a shorter average length of stay of 2-3 years.
    • Older Australians are asset rich and income poor, often continuing to save while maintaining a lower standard of living.
    • Decisions are not always well-planned or informed, with few retirees seeking financial advice.

Read the complete report findings and recommendations here.

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