Falling house prices tear holes in retirees’ safety net

Big falls in home prices could have retiree home-owners rethinking their future.

house prices

Sharp falls in the housing market in most states and territories could have retiree home-owners rethinking how they will fund their final years.

Home ownership in Australia peaked at about 73 per cent in the mid-1960s, but has since declined to 68 per cent. However, YourLifeChoices research has found that more than 70 per cent of members own their home mortgage free – acting as a significant safety net if retirement income starts to fall short. However, if house prices continue to fall, that safety net may fail.

Moody’s Analytics says there is more housing market pain in store in 2019, particularly in Sydney and Melbourne.

It forecast a 3.3 per cent drop in the Sydney property market this year, and a possible six per cent drop in Melbourne.

CoreLogic revealed last week that the value of dwellings nationwide dropped 4.8 per cent in 2018, making it the weakest housing market since 2008. It found Sydney home values were down 11.1 per cent from their July 2017 peak, while Melbourne values had dropped 7.2 per cent since the November 2017 peak.

“Australia’s economy is highly regarded for its 27 years of recession-free growth, an enviable run by developed-economy standards, but the downside risks from its hefty household debt loom large,” Moody’s analysts told The Australian.

They have forecast that values in Perth would decline 2.8 per cent before recovering in 2020 as a result of population growth; that house and apartment values in Brisbane were likely to rise by 1.2 per cent and that Adelaide would lift 2.6 per cent in 2019.

In YourLifeChoices’ 2018 Financial Literacy Survey, 39 per cent of 2240 respondents said they would downsize to supplement their retirement income. Another 4.6 per cent said they would use a reverse mortgage.

The incidence of retirees needing to free up money tied up in assets, i.e. the family home, to fund their retirement has risen due to increasing longevity.

Aged Care Steps director Louise Biti told YourLifeChoices that based on figures from the Australian Institute of Health and Welfare (AIHW), Australians should plan for about 17 to 25 per cent of their retirement years to be ‘care years’.

“For example, if you expect a potential of 30 years in retirement, this might include five to 7.5 care years,” she said.

And the cost of those “care years” can be expensive.

“How much you will need to pay is difficult to predict,” she says. “Currently, it can vary roughly from $100 to $6000 a week, depending on the options chosen. This covers the wide range of options, from basic homecare packages to full-time nursing care at home.

“If you wanted to have 24/7 nursing care at home, you might need to employ four to five full-time nurses or carers to work eight-hour shifts.”

The value of your home can have a big impact on the funds you have available to finance those years.

Are you concerned about falling property prices? Do you believe that if you sit tight, you can ride out the downturn?

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    COMMENTS

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    MICK
    8th Jan 2019
    8:45am
    A bit of a beat-up Janelle.
    Those who own their own homes have no problems other than health issues later in life. I find the 'up to $6000 per week' tag ($312,000 pa) put on this just plain nonsense.
    Who would consider their needs so overwhelming to spend this sort of money. It does not guarantee any longevity and the end will come despite spending your kids inheritance.

    I find the notion distasteful and any of our cohort who indulge in those sort of rubbish would have to be pretty narcissistic types.

    We have a universal health care system in this country. Use it despite its shortcomings. Nothing will stop you reaching the same destination we all have to arrive at. That's life.
    mogo51
    8th Jan 2019
    10:54am
    Agree Mick, typical over reporting and beat up, but lets not rely on the truth, everything has get that sort of treatment. What happened to the days, they just reported the facts.

    The Australian housing market has been over heated for many years and it has always been in the firing line. Housing prices are ridiculous and Agents have made a bundle. Now the sand is shifting, it had to happen one day.
    ozrog
    8th Jan 2019
    11:49am
    Another scare tactic on us older generation. We are smarter and have been around longer. I've owned my place for years its trebbled in value so I'm in front even wth a 3% drop.
    Anonymous
    8th Jan 2019
    12:32pm
    Not beyond the realm of possibility if labor get in.
    They will go on yet another debt binge bankrupting the nation
    Greg
    8th Jan 2019
    12:58pm
    Lothario - that's already been done by the current gov, go back a few years, your mate Howard started the welfare for everyone payments when he was rolling in mining money. Family Tax Benefit B a great example, didn't matter how much income hubby earned as long as the wife was under the right amount you got FTB B, how about the Baby Bonus and then they increased it from memory. Had so much money floating around and was able to just give it away to everyone including the wealthy to buy votes time and time again.

    But now it's a problem, don't have the income now and makes it very hard to wind back payments as people will vote you out so the debt just keeps getting higher and higher - where are we now 500, 600, 700 billion, I can't keep up.
    Rae
    8th Jan 2019
    1:26pm
    Absolute nonsense Lothario. We have never defaulted on sovereign debt. That $4 trillion private debt and the huge derivative position encouraged by the RBA and APRA is a concern but is quite outside Government control anyway. Get the fascist economists out of advisory positions and we could turn it around but I'm not holding my breath as the Berlin Handbook of 1934 still appears to be in use in Canberra and in our State Government offices as well.

    If the property prices react as experienced overseas a lot of capital will be lost and lessons learned about market s and fundamental values. Asset hyperinflation was always going to correct eventually.

    Buying property at foolish yields has always been a risky gamble.
    Ardnaher
    8th Jan 2019
    2:12pm
    For those who don't know...Australia has regained its AAA credit rating.
    MICK
    8th Jan 2019
    3:42pm
    And the country's debt is now over $7 billion:

    http://www.australiandebtclock.com.au/clocks
    Retired Knowall
    8th Jan 2019
    5:03pm
    By July 1 2013, in the final months of the last Labor government, net debt had risen to A$159.6 billion. The Liberal-National Coalition won the federal election on September 7 2013. ... As at July 1 2018, the budget estimate of net debt in Australia was about A$341.0 billion.
    TREBOR
    8th Jan 2019
    9:01pm
    Oh.. that's nice.... they've only more than doubled the net debt... phew - for a moment there I thought the LNP_had absolutely trashed the nation....

    Tsar Chasm...
    MICK
    8th Jan 2019
    9:31pm
    Not according to the ATO Retired Knowall. The ATO published the (federal government) debt at $533 billion at 30 June 2018.
    The debt clock is what we owe NOW and you may want to study the breakdown. Currently over $7 billion but that is total debt with federal government debt at $675 billion.

    The figures tell a compelling story. Not one single thing I can think of achieved by the current government other than debt and Royal Commissions into the Opposition. This lot need to be sitting in jails for what they have done.
    Retired Knowall
    10th Jan 2019
    8:27am
    Gross debt is the total amount of money a government owes to other parties. Net debt is gross debt, adjusted for some of the assets a government owns and earns interest on.
    Not all government assets are included in the calculation of net debt. For example, the equity holdings of Australia’s sovereign wealth fund – the Future Fund – are excluded.
    It’s worth noting that net debt doesn’t give the full picture of a government’s balance sheet.
    If the government borrows A$1 (by issuing bonds) to buy A$1 worth of equity (investment in another asset), net debt will rise. That’s because bond issuance (debt) will rise by A$1, without an accompanying increase in investments that pay interest.
    In Australia’s case, this distinction is relevant, because the government currently has about A$50 billion of investments in shares (which aren’t considered interest-bearing for accounting purposes) and around A$50 billion in equity in public sector entities (like schools, hospitals and infrastructure).
    Over time, a government’s debt position will reflect deficits of past governments, with budget deficits increasing the total debt, and surpluses reducing it.
    Ardnaher
    8th Jan 2019
    10:06am
    We sold our house a month ago. Some have said we sold it too cheap. We did not. When you factor in the holdings cost waiting for a buyer and a dropping market you have to be realistic when you sell. A home is only worth what people are prepared to pay.

    I saw a home built at the same time as ours same suburb, same number of bedrooms etc. Price $20K less than ours and it has now sold...I would assume it sold for even less than the asking price as do most homes.

    If you are not realistic you will only ride the market to the bottom.
    MICK
    8th Jan 2019
    10:39am
    Hope you thought that through. What now?
    Unless you are on your death beds it is a question which needs to be pondered as you have to live somewhere and rents may be unaffordable in the future. I read a lot of posts from retirees in this position and their retirement becomes survival rather than quality of life.
    Ardnaher
    8th Jan 2019
    2:08pm
    Yes we certainly did think it through. We were glad to sell it at three times its purchase price and you are assuming we have to rent or buy elsewhere.

    We purchased a new residence 9 months ago.
    MICK
    8th Jan 2019
    3:42pm
    Well done.
    Barbara Mathieson
    8th Jan 2019
    10:46am
    More and more scare tactics appearing each day!
    I rent privately, have little savings, but seem to ‘ manage’ with a bit of CS ( common sense)
    Perhaps life is easier if you have less.
    KB
    8th Jan 2019
    1:35pm
    True Barbara I If you live frugally then you can get by. The more money you have the more problems there are.
    Barbara Mathieson
    8th Jan 2019
    10:46am
    More and more scare tactics appearing each day!
    I rent privately, have little savings, but seem to ‘ manage’ with a bit of CS ( common sense)
    Perhaps life is easier if you have less.
    Grateful
    8th Jan 2019
    10:48am
    "TEAR HOLES"!!!! Settle down, that type of headline is pure hysteria. House prices have (artificially) nearly doubled in price in just the last 6 years. What do people expect, that these ridiculous and totally unsustainable price rises will continue at that rate?
    The vast majority of that rise in house prices has been by taxpayer subsidized and grossly irresponsible bank lending which has finally been called out.
    Home owners can count their lucky stars that house prices, even if they drop by 20%, they are still WAY above the REAL value of their homes and will ALWAYS be a safety net if they decide to downsize, even with a 20% drop, so too will their down sized destination also be so much cheaper.
    Let's get back to responsible discussion and stop trying to equate to the tabloid press that is constantly feeding us with hysterical junk just to sell their papers.
    And Mick, there are some unfortunate elderly people who have suffered severe physical disabilities who WANT to spend their latter years in their own home and not imprisoned in an unwanted nursing home or care facility. They are FAR from being narcissistic and who comes first, the quality of life of that elderly person or the "family inheritance". Get you priorities right before you make such criticisms.
    MICK
    8th Jan 2019
    11:26am
    There are many tribes out there Grateful and I did not seek to throw them all into the same basket. Just sort of came out that way.
    You may be a little premature with banks as well. It is interest rates and negative gearing which has driven the housing frenzy. Take away both of those and you'll have much lower house prices. My guage of what a place is worth is its replacement cost, land + materials + labour. Anything else is just fear, a feeding frenzy or rents/capital gain.
    I'll stick on the narcissistic comment which was made in regard to the upper limit quoted for the cost of care. $6,000 a week is ga ga and nobody is worth that for a few more days of life.
    TREBOR
    8th Jan 2019
    12:05pm
    Economic triage (Medical Practice 301):-

    Triage 1:- Those whose wallet cannot save them...

    Triage 2:- Those whose wallet can save them with some intervention by Scottie ...

    Triage 3:- Those whose wallet can save us working for quite a while..
    Ardnaher
    8th Jan 2019
    2:10pm
    I totally agree homes went to unrealistic levels and in my opinion were never worth what they were selling for.
    AutumnOz
    8th Jan 2019
    11:01am
    When senior Australians bought their home it may have cost as little as $15,000 for a three bedroom home on a quarter acre block of land and if they are still living in the same house today it could now be worth over one million and closer to two million dollars.
    How is that couple losing money when house prices fall?
    The main thing endangering their retirement income is government constantly changing the rules and assements against assets for pensioners and part pensioners and messing up the income and therefore the lives of self funded retirees.
    As for Aged Care - seniors were much better off when family provided the care for them, it wasn't a free ride for the pensioners as they paid for their food and board and often minded the children or grandchildren of the child they lived with. This family care is now impossible with the rules and regulations of Centrelink messing up any family arrangements.
    If a mildly disabled child lives with the parents the parents are assumed to be charging that child rent and their pension descreases accordingly, in the same way if a parent is living with the disabled child the situation is reversed and the child loses part of their income.
    Government interference in what used to be family matters has made life most unpleasant for many as we can see from the number of homeless people living on the streets of cities and towns in Australia. At one time this did not happen but now it is seen as a normal part of life instead of a disgraceful disregard for human beings mainly caused by government indifference to the needs of Australians who pay their salaries.
    TREBOR
    8th Jan 2019
    11:15am
    I was about to slide that first argument back at someone who justified concessional capital gains as being the result of the lowering value of the dollar over time - the market has more than compensated for that...

    I didn't know about that blatant rort by Centrelink, about a disabled child at home.
    MICK
    8th Jan 2019
    11:31am
    A capital gain is exactly that....a REAL gain in value. As I have indicated to you a number of times TREBOR I'd have no issue with taxing a REAL capital gain which is inflation adjusted. As I also indicated that used to be how it was done but the greedy pollies decided they could milk us all for more by tilting the tables heavily in their favour.
    Only people who own nothing can go down this road TREBOR. I think my wife and I deserve a bit fairer treatment as do any recipients at the end of our lives. The government might disagree but then this is an irresponsible group of people who are happy to take and then waste what people work hard to achieve over a lifetime. That is not right!
    TREBOR
    8th Jan 2019
    12:09pm
    We are in agreement there Mick - full capital gains after adjustment - indexing - but a blanket figure was always a falsehood.

    Sometimes you sound like Rainey.... anyway - people who own nothing get no capital gains.... but since the percentage of gain in property values lately has far out-stripped inflation.... and no way should anyone be receiving both negative gearing/deductions and full concession.... well... it has to be one or the other.... and fully taken into account.
    MICK
    8th Jan 2019
    3:44pm
    That's because the official inflation figures are fake. Those employed to produce them need to explain how they are calculated and they need to be fired for misleading the public and/or fess up to WHO put them up to it.
    Anonymous
    8th Jan 2019
    4:00pm
    Howard did the right thing fixing labor rort
    Recine cap gains by 50% for assets held over 1 year
    Didnt go far enough but at least it is fairer than labor
    MICK
    8th Jan 2019
    9:46pm
    Howard flogged off the world's 3rd largest LNG deposit to foreigners. To protect his donors in the coal industry from competition? Now we have no gas?

    The current government keeps trying on the coal corruption. It intends to sign contracts for many new coal fired generators in defiance to Australians who have told the criminals NO.

    I hope Bill gets the jails ready for this lot. You should be in with them Lothario. You belong there too.
    AR848
    8th Jan 2019
    11:04am
    Reports of housing price downturn are a reflection of the markets in Sydney and Melbourne due to a natural drop after a rapid rise. The Perth market is still in decline due to the mining industry locally. In the main house prices across Australia have remained stable or shown a modest increase over the past 12 months. Some pockets such as Sunshine Coast etc have shown a decent increase in the same time frame. Unfortunately the media has gripped the figures from the 2 main housing markets and transposed this information across the board. Sorry to see that this reporter has also jumped on the bad news bandwagon to create more uncertainty in the minds of our most vulnerable -the aged sector.
    TREBOR
    8th Jan 2019
    11:16am
    Was discussing that with the ex yesterday - up here it would take a long time, if ever, for that downfall in the major centre to affect prices. People will still want to retire here after a lifetime in Smogsville.
    TREBOR
    8th Jan 2019
    11:10am
    a. blame the Royal Commission into FIs for causing all the trouble by finding out how the thieves were operating

    b. say it's just a normal market adjustment that occurs periodically

    c. the investment housing market has long been overdue for a serious adjustment

    d. blame the banks and the government for fueling an artificial market along preferential and often flimsy borrowing lines and supported by flimsy 'collateral'

    e. screech Labor did it...

    Any other options?
    MICK
    8th Jan 2019
    11:33am
    And the coalition want it to go on unabated forever?
    Actuallu not sure how you pin the tail on Labor. After Rudd won office the GFC hit and interest rates in Australia followed the rest of the world into the gutter. THAT IS HOW THE AVALANCHE BEGAN. Nothing to do with Labor! Be fair.
    TREBOR
    8th Jan 2019
    12:12pm
    I was merely putting up a list of the usual responses and waiting for some bites - you misread me, Mick. If I could have posted the Scottie cartoon of him sticking the pump into the bike wheel and then falling off, and growling "Bloody Labor" I'd have done it.

    The word 'screech' should have told you what I meant... it's a parody of the ages old by now Liberal approach to all problems - Labor did it!! The gun that fires backwards....
    MICK
    8th Jan 2019
    3:46pm
    I'm glad we agree on this but your post sounded different. Maybe my perception.
    Cheers
    Anonymous
    8th Jan 2019
    9:35pm
    You won’t get any bites . Most posters have wisened up to your and Micks rubbish
    MICK
    8th Jan 2019
    9:47pm
    ANd EVERYBODY knows who your employer is.
    TREBOR
    8th Jan 2019
    11:21pm
    Mick and I are like two separate sniper teams - we pick the eyes out of a gnat at 300 yards.... we use open sights...
    Curious
    8th Jan 2019
    11:16am
    It would be wonderful for all pensioners to have their houses revalued (as property market takes a beating and prices fall) by Centrelink. I wonder how many home owners are just over the bracket creep valuation which affects their Centrelink payment.
    TREBOR
    8th Jan 2019
    11:17am
    Don't hold your breath waiting for the government to step in there and just do it.
    MICK
    8th Jan 2019
    11:35am
    Ah yes Curious...... Lets take a punt at what will happen when house prices fall. NSW may see a stamp duty increase even though rates were not reduced with bracket creep in the past. Centrelink will put the bar up to keep people off pensions and benefits. It'll be interesting.
    Sundays
    8th Jan 2019
    6:12pm
    The family home is not included in the Centrelink Asset test. Only investment properties
    TREBOR
    8th Jan 2019
    9:04pm
    My view is that only income incurring assets should be included... the old pensioner retiree has some right, surely, to enjoy the boat and Windbag or whatever he bought with his post-tax money...

    Does Centrelink give back that amount reduced from pension for too many no income bearing assets, once they are sold off? Not on your nelly - the ATO will want tax on the sale.
    MICK
    8th Jan 2019
    9:48pm
    Sundays - every so often the LNP drop the hint. Its coming. If they get in this will happen.
    TREBOR
    8th Jan 2019
    11:23pm
    Yes - the old 'include the family home in the assets test' - something that will never affect them in any way - is a regular try-on.

    Their pension should be means tested....
    Old Geezer
    8th Jan 2019
    11:25am
    Tighten your belts people houses are falling. The more you tighten the more houses will fall and there will be some real bargains for those who know their house prices. I'm looking at least a 50% fall in Sydney and Melbourne myself.
    MICK
    8th Jan 2019
    11:37am
    Ha ha ha. You wish.
    A guy called Phil Anderson is calling around 2020 for the game to end but even then unlikely falls will be as large as you are calling. Unless rents also fall I'll be looking to buy at those sort of prices. So will many others. Only a world depression could see that happen.
    Old Geezer
    8th Jan 2019
    11:55am
    Mick most people you included will not buy until you are sure prices wont fall any further. Bargain hunters will already have bought and rises will rise again before you even know it. I bough a house in Sydney at over 30% below its peak in the 1990s and people thought I was completely batty. That property was 5 times it's value last time I looked at prices. Yes way over priced for an old 3 bedroom house.
    MICK
    8th Jan 2019
    3:47pm
    Property stagnated for 20 years from the 80s and will do the same again before the next big push is on.
    Anonymous
    8th Jan 2019
    4:02pm
    Labor can’t blame negative gearing anymore
    What and who will they blame now - oh yes climate change
    TREBOR
    8th Jan 2019
    9:05pm
    Lower prices in no way affects the principle of negative gearing being a problem for home buyers...
    MICK
    8th Jan 2019
    9:55pm
    Of course you and your employer only blame Labor. As Kevin Rudd said when Murdoch came after him "yes, I started WW3". That told a story. Yours is the normal BS.
    You have no credibility so give up!
    Old Man
    8th Jan 2019
    11:54am
    This is a correction and it happens every time there is an unusual surge in house prices. It is about what is to be expected but what has been omitted from the article is the percentage increase of homes from, say 8 years ago when the unusual surge started. There will be a satisfying increase in the value of the family home notwithstanding the current correction.

    What is of more concern about retirees and house prices is Labor's policies about stopping negative gearing and changing the capital gains tax formula. This will have a very damaging effect on house prices and rental costs. Keating legislated to remove negative gearing in the late 1980's and reversed the legislation some 18 months later because of the effect on rental costs. We don't need to have so called "experts" telling us the theory behind removing negative gearing because we have a perfect example of what it does in practice. Labor tries to sell this disastrous policy as a way of slowing down house prices yet this has happened already so how low do home owners want the value of their homes to drop.

    Retirees, especially those who have an SMSF will also be bashed over the head with Labor's stupid policy on franking credits. It has been said that the drop in income will cause a lot of SMSF retirees to then get a pension but that can only happen if the assets are below the current threshold. The age pension has a twofold eligibility system; assets and income. What happens to those who have shares which are valued above the assets limit and will have their income reduced below the income limit?

    I note that Labor and its supporters have decried the change in the assets and income test for the age pension but this is only political rhetoric as neither Labor nor its supporters have ever stated that they will revert the asset and income test to what it was. One can only assume that taxes will rise for the workers and business, unions will get what they want which will increase building costs, illegal immigrants on Manus Island and Nauru will be flown to Australia and the people smugglers will be back in business once more.
    Old Geezer
    8th Jan 2019
    12:07pm
    OM the problem with Labor's policies is they haven't left enough after tax for people to take the risk and invest. It will be too much risk for too little gain. No investment means no new dwellings which means demand for rentals will outstrip supply and rents will skyrocket. Sure Labor has left negative gearing on new dwellings but what investor will buy if their is nothing to be gained when they sell as that's when the money is made. With interests rates having more upside than downside, no incentive to buy properties then we have the prefect storm for a 50% fall in property prices. Remember prices fell 30% in 1990s with falling interest rates and the current incentives for investors to buy.

    There was a survey down on SMSFs and most said they would just invest overseas than in Australia if there is no refund of franking credits. We need more investment in Australia not less so that will only make the coming recession worse than it should be. If Labor's policy not ot refund franking credits come sin force on July 1 2019 then people relying on franking credits will not have them to spend come Christmas 2020 when they usually get their refunds. That will make for a bleak Christmas for many businesses as well as people.

    People like me will also just sit on the sidelines with cash and wait for better investment opportunities as we can afford to which is not good for the economy either.
    Rae
    8th Jan 2019
    1:45pm
    Yes OG. Hard to find anything worth buying at current prices. Money is just sitting idle because these overpriced assets will correct sooner or later.
    MICK
    8th Jan 2019
    3:50pm
    And too bad if the inflation genie does its work. Damned if you do. Damned if you don't.
    One thing's for sure though and that's rents can't go up any more unless working Australians get real wages. The rich can't have that though because they need their tax cuts. So the game goes on.
    Give me a French Revolution 1800s style.
    inextratime
    8th Jan 2019
    4:07pm
    Contrary to the thinking that restricting negative gearing will push up rentals, has anyone considered that if house prices plateau, young people who currently have to rent, may be able to buy in future, freeing up rentals that they would otherwise be taking up ?

    The only reason we have negative gearing is because people cannot afford to buy and need to rent so they pay the rent for someone else to buy. Interfering with a free market has always caused an imbalance in the market and of course the pollies don't have any investment properties do they ? LOL.
    Old Geezer
    8th Jan 2019
    4:35pm
    If young people cant afford to buy now they never will.
    MICK
    8th Jan 2019
    9:58pm
    Correct inextratime. As prices fall young people will buy, rents will fall and there'll be an excess of rental property.
    The main losers will those who access most of the negative gearing benefits: the wealthy and upwardly mobile on good salaries. What else is new.
    ardnher
    10th Jan 2019
    11:27am
    From my observations, a great many of the younger generation prefer to rent as they want the "lifestyle" NOW!

    Going to Aspen for skiing, having the latest $1000 pair of shoes and handbags, paying $100 a night in drinks when doing out on the town. You cannot have both unless you are on an enormous salary (or living with Mum and Dad).

    Owing a home is not seen as important as it once was and I am pleased that the banks are tightening up on credit cards. If you cannot pay the balance in full in three years you will not get access to one so I understand.
    East of Toowoomba
    8th Jan 2019
    12:04pm
    The cost of housing in Sydney and Melbourne has been obscenely high for a while and locked an entire generation out of the market so I think it is a good thing that the prices are coming down.

    Most older people won't be hurt by a 5% drop in house prices as they most likely paid a lot less for the the house than the current market value so they are still going to be winners when they sell.

    Speculators and investors will more than likely be the ones who will suffer most from the downturn. A house is a home unless it is an investment and prudent investors should always factor in a market correction in whatever commodity they are investing in.
    alinejordan
    8th Jan 2019
    1:06pm
    falling rates would be the logical outcome of lower house prices. that can only be a good thing surely!
    Rae
    8th Jan 2019
    1:14pm
    As a saver I now realise I will get no support from the Governments and will actively have to prevent them stealing those savings through legislative capture. I'll be saving for those final years like crazy and watching discretionary spending wastage like a hawk.

    Falling house prices is actually good. It may lower insurance and even get back to the fundamental price where rental income is around 5% yield after costs which it hasn't been close to for years now.

    I feel sorry for those over indebted. It's a tough lesson hard learnt. Many of us learnt it in the 89 to 92 banking crisis and no longer indulge in the use of debt we can't afford.
    SFR
    8th Jan 2019
    10:13pm
    Don't feel sorry for anyone that has borrowed & keep borrowing way above their capacity Rae, they only have themselves to blame but as you said they will learn like we did. Big world sink or swim
    ardnher
    10th Jan 2019
    1:12pm
    If borrowers are over 21 they are regarded as adults and supposedly make adult decisions.
    I do not feel sorry for those who do not live within their means. You just learn to do so as our parents did. You go without and only purchase the necessities and watch every dollar you spend. It can be done no matter your income. Just learn to be frugal and don't worry about what others think. Buy clothing at op shops, learn to shop when goods are reduced down at end of day and learn to cook and no takeaways. You will be healthier and have more dollars in your pocket.
    Curious
    8th Jan 2019
    1:19pm
    I am absolutely modified with this article. The retirees in this country are getting a raw deal. We worked all our lives, saving hard for rainy days and retirement besides looking after our families. OGP has been shortchanged over the generations to the extent some of us, who are fortunate enough to be self-funded retirees, giving those who genuinely need OGP a fair-go. For those, who are self-funded retirees, are not poor enough to get the OGP, but are not rich enough to live a comfortable lifestyle in retirement. All political persuasions have no solid policy to take care of the elderlies in their last leg of life and give them some dignity. They want to strip of their asset, which they built all their life to put a roof over their heads. The draw-down schemes on the elderly home may provide a solution for those with longevity. However, it may not be the elderly's choice to leave some inheritance to their offsprings to remember them by. The family home where the younger generations were grown up. Maybe the elderly should not be too sentimental at all. What a shame, we don't have choices anymore in our democracy.

    When the economists, journalists, and real estates agents talk about the drop in the market price of houses and apartments over the last 18 months, they are talking about the drop of the prices from the peak of 2017. If the peak of 2017 was a run-away bull market price, the capital gain of the property over the period up to 2016 is still a very good and handsome profit, too. This is not a glommed and dommed scenario as portraited by the media.

    Recently, I had to sell my investment apartment at a lower price due to the market. Although I didn't get the price I asked for, I still have to pay a good sum of money for the capital gain tax. A family home when sold does not have to pay tax. It is a bonus.

    When people talk about the needs for retirement, I hope they realize that no one size fits all. Please put it in the right perspective.
    MICK
    8th Jan 2019
    10:00pm
    Yes Curious. Self funded retirees have been come after by the Abbott, Turnbull and Morrison governments. Relentlessly. The result is many of us live on an income less than the pension and the bastards tell us to sell the assets and live of the capital until it is all gone.
    How to rob the next generation! This is what the top end want as they seek to own it all and the current government is delivering.
    ex PS
    9th Jan 2019
    11:29am
    In a time where the retirees and those contemplating retirement make up a large part of the voting pool, why are we putting up with the treatment handed out by politicians? We have the power to make ground breaking changes, but we choose to vote for the same old party's regardless of performance.
    Party ideology and loyalty are fine for the young, they have time to realize their mistakes and correct them, us older citizens have to be more select as to who we let make decisions for us.
    Look at the policies, forget this nonsense about if this party gets in this will happen, or if that party gets in that will happen, nobody can forecast these things with any honesty. Place your vote for the policy that will do you the most good, don't vote for a Party because of fear mongering or misplaced loyalty, they will show you none.
    Farside
    9th Jan 2019
    2:21pm
    @Mick, selling assets and living off the capital is not robbing the next generation, your heirs maybe but definitely not the generation as a whole. Your asset has become someone else's asset to be passed onto the next generation and spending your capital is in fact good for the economy and benefits those today. You will just have less to pass onto the next generation unless you are able to earn more from your capital than you spend. Such is life.

    and @Curious, "modified with the article"? Did you change your views to those held before reading the article?
    Curious
    10th Jan 2019
    8:21am
    Farside, no I haven't changed my views to those held before reading the article. I am modified with the article because I feel the article suggests that retirees suffer greatly due to the housing price falls in the last twelve months. As Mick suggested that the successive governments have been coming after retirees and now Labour Party is planning to make our nest eggs smaller if not gone altogether.

    Labour Party suggests that most of the capital gains and negative gearing should not be an incentive for investment even if they are property bought off the plan and stimulate the economy with employment. The risk of this type of investment has been totally discounted. The Greens even said that property investors are lazy investors, who are unlike the shareholders. This article suggested that even without the capital gain tax and negative gearing, the retirees, who own their family home would suffer due to the housing price falls. What chances will a self-funded retiree have with an investment property?

    We, retirees, have done our share to prompt the economy when we were working. When retired, we need to ripe the fruits of our labour, only to let our government take them away. It is a daunting and sinking feeling with despairs.

    I have been frugal all my life and save for rainy days. Whatever, I have left, I wish I can leave for the younger generations to have a chance in life.
    Farside
    10th Jan 2019
    11:19am
    @Curious I don't understand how you are modified if you did not change your well articulated view. From the context when you say 'modified', do you mean 'mortified'?
    Curious
    10th Jan 2019
    12:57pm
    Thanks, Farside. I meant 'mortified'. didn't realize my typo. Sorry
    floss
    8th Jan 2019
    2:24pm
    And I thought there were no vultures in Australia O.G.
    MICK
    8th Jan 2019
    3:53pm
    Don't you just love the business community. In all honesty though we also look for some value as some assets peak or return zip. Can't live off fresh air.
    I do think about the bottom end though. Painful to see and governments create this because they are directed by forces other than the conscience of their MPs. Ok, pollies have little or no conscience. Ask Amanda Vandstone who has come out all lovie dove after decades in the Howard regime doing just the opposite.
    Anonymous
    8th Jan 2019
    4:03pm
    Let’s see Shortie do a backflip on negative gearing now
    What an idiot !
    MICK
    8th Jan 2019
    10:01pm
    Lets see Lothario go pick up his pay cheque. What a moron!
    Old Geezer
    9th Jan 2019
    10:02am
    So what you are saying Floss is that I have no right to buy an asset when the market is down and sell it when it rises in price? Oh dear I thought we lived in a capitalist society too.
    ardnher
    10th Jan 2019
    11:21am
    I fwe did not have investors were on earth would "renters" live.? You could die waiting for government housing..the lists are so long!
    ex PS
    9th Jan 2019
    11:21am
    I think that if you are relying solely on the value or equity of your home to finance your future you are going to be disappointed.
    If I was told it would cost $6,000.00 or even $2000.00 a weak to keep my worn out body going for a couple more years, I would seek other options. I or more to the point the quality of life I would expect are not worth it.
    Let us hope that by the time this decision has to be made, the government will take the wishes of the populace as more valuable than those in the Aged Care Industry who just want to relieve us of our property and money by providing services we don't want.
    Colours
    9th Jan 2019
    4:13pm
    We have our home and no plans to move, so falling house prices don't matter to us. But our kids are working full time and have little prospect of buying a home. So the faster and further prices fall, the better.
    Adrianus
    9th Jan 2019
    5:43pm
    Well Colours, I suppose you would be expecting the fall to stop as soon as your kids scrape into homeownership? But real estate values may not behave as you wish? What if they keep falling and the LVR falls outside the lender's guidelines? My personal wish is that the falls are gradual and spread over a few years, so that we all don't suffer, regardless of our situation.
    ardnher
    10th Jan 2019
    10:35am
    We had no plans to move either Colours but things can change in an instant as you get older ..I believe it is better to be pro-active than reactive. Nothing worse than having to sell up quickly and then find somewhere else to live.


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