Scott Morrison needs to consider housing affordability for retiree renters.
Once again, housing affordability has hit the headlines, this time in anticipation of a speech by Treasurer Scott Morrison, where he is expected to resist in refusing to change negative gearing concessions, but to offer a new public housing scheme in the May Budget.
And once again, the suggestion is that it is the younger members of society who are doing it tough in this overheated property bubble. Yet, the research shows a very different tale. In particular, the plight of retirement renters revealed by YourLifeChoices and The Australia Institute (TAI) suggests that these retirees are doing it toughest of all.
The inaugural Retirement Affordability Index™ was released yesterday. Analysis of the six retirement tribes – Affluent Couples, Constrained Couples, Cash-strapped Couples, Affluent Singles, Constrained Singles and Cash-strapped Singles – has revealed a very different life in retirement for each group. Singles who rent spend 29 per cent of their income on housing. Couples who rent spend 22 per cent. Those who own their own homes spend 8 to 16 per cent.
So what do they go without? Renters spend much less on health. It is fair to assume they have similar health needs to others their age, but are choosing or are being forced to spend less, perhaps foregoing vital tests or preventative measures which are considered necessary by wealthier retirees.
Similarly, with recreation and transport (including maintaining a car), the average retired renter is spending just $80 per week compared to the average retired homeowner who is spending $200 in this category. As Matt Grudnoff from TAI has noted, “This means that retired renters have significantly less opportunity to interact with other people and get out of the house. Retirement for some people can be a lonely and isolating time. Being a renter in retirement can only increase the chance of this as these individuals are more likely to be stuck at home, owing to their reduced financial circumstances.”
And the third area of major concern for retirement renters is their exposure to rising costs. The Retirement Affordability Index™ has also revealed the sharp difference in exposure to rising costs. Both the renting retirement tribes (Cash strapped Couples and Cash-strapped Singles) are facing higher price increases than the Consumer Price Index (CPI). Those on private incomes (Affluent Couples and Singles) are facing lower price rises than the CPI, and those on an Age Pension, but who own their own homes (Constrained Couples and Singles) are experiencing price increases in line with the CPI.
So let’s hope that this retirement rental stress is factored into the equation when the Treasurer suggests his solutions to the housing affordability crisis in the May Budget.
What do you think? Are you a retiree renter? Do you believe your costs are rising faster than CPI? And if you are a homeowner, how do you view the current housing market bubble?