Melbourne, October 10: If you haven’t bought a home by 45, you have probably “missed the boat”, warns Australian economist.
For Australians today, a foothold in the property market by 45 years of age is a must; if you nurture any dreams to own your own home.
An increasing number of older Australians are experiencing housing insecurity and impoverishment in retirement, according to the report released by the Swinburne Institute for Social Research.
The report examined the wealth of people aged 40 to 64 years and recent retirees.
It evaluated the degree to which households can accumulate wealth for retirement, focusing on housing, and the impact of relationships and divorce or separation.
Rising house prices, unemployment risks and thus unavailable bank loans are also some key factors.
Lead researcher Dr Andrea Sharam says: “Social housing eligibility should be widened to order to cater for a broader range of incomes.”
This would help prevent the loss of wealth associated with being a private renter and minimise the danger of retirees exhausting their resources before end of life.
Single people and couple-only renters over 45 years of age tend to have little wealth.
“There are currently 425,000 people in lone person or couple households over 50 renting in Australia with this number expected to rise to 600,000 by 2030 and again to 830,000 by 2050.
“This number of impoverished older people equates to a huge increase in demand for housing assistance”, Ms Sharam said.
Men and women are revealed to have different pathways into rental poverty in old age. For women the cost of care and the gender wage gap negatively affects them, while for men low educational achievement, consequential limited employment prospects and disability are factors.
“Relationship breakdown typically adversely impacts wealth with one if not both former partners often falling out of home ownership and not later recovering home ownership.
“Single mothers with young children are particularly vulnerable,” Dr Sharam says.
- The report has called for the axing of the capital gains tax concession in order to discourage people buying property for capital gains.
- Another policy change call is for reinstatement of inheritance tax, to reduce ‘the widening wealth gap between home owners and renters’.
- It also called for increased investment in social housing and better tenancy rights including age-specific rental supplements.
However, removing the capital gains concession could be counterproductive and would result in less investment in residential property construction, according to Victorian Property Council executive director Sally Capp said.
Ms Capp opined that housing ambitions were still affordable in Victoria and confirmed that the Victorian government would not look at introducing any new taxes.
Treasurer Scott Morrison also said that the debate on Australia’s housing market was prone to going overboard.
In an interview at the International Monetary Fund’s headquarters in Washington, Mr Morrison had said that there was “no evidence” that the property market was overvalued.
The rise in Australian homes price was effectively paused last year, after banks raised mortgage rates.
However, growing population through skilled migration is one of the factors that may soon erase that pause. Against all speculation, house prices have continued to rise, at least until now.
ABS recent data showed improving dwelling approvals and the housing market portraying record high prices against record low interest rates.