Older Australians are being urged to downsize in the face of a national housing crisis.
The Australian Bureau of Statistics (ABS) has released data showing that while only 4 per cent of households needed at least one more bedroom, more than three-quarters of households had at least one bedroom to spare.
The Survey of Income and Housing revealed that while the number of people per household had remained relatively stable at 2.6 from 2000–20, the number of spare bedrooms increased from 12.7 million in the 2017–18 financial year to 13 million in the 2019–20 financial year.
Ray White chief economist Nerida Conisbee said moving households with multi- or single-parent families was “not realistically an option”.
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“What is an option, however, is to get people into homes that are more suitable for their stage of life,” Ms Conisbee said.
“The majority of spare bedrooms are in households with a couple only or a single person and most of them own their own homes.
“A big challenge with getting older people into smaller and, presumably, cheaper homes is financial.
“Australia has a shortage of suitable homes in well-located areas but it certainly doesn’t have a shortage of bedrooms.”
Retirees and older Australians are opting to stay put due to several factors including the family home being exempt from the Age Pension assets test, costs and stresses involved with downsizing, a lack of suitable housing stock to downsize where they want to live and their emotional attachment to the family home.
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Free market think-tank Centre of Independent Studies’ chief economist Peter Tulip suggested to nine.com.au that the NSW government’s stamp duty reforms may be a model for other states as a financial incentive to downsize.
Under the NSW policy, from 16 January 2023 first home buyers will have the choice of paying stamp duty or an annual land tax at the rate of $400 plus 0.3 per cent of the land value per year. The move is designed to help first home buyers enter the property market.
“Tax on [property] turnover means people are in houses that don’t suit their circumstances, so we would get a better allocation of houses if we replaced stamp duty with land tax,” he said.
Mr Tulip also said older homeowners received large capital gains for no effort or sacrifice and were often their own worst enemy when it came to downsizing.
“They have spent the last 20 or 30 years opposing the construction of new apartments, townhouses or retirement homes in their suburbs, so most suburbs lack a diversity of housing types that would allow people to move to more appropriate housing while maintaining their social networks,” he said.
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“They want to move to somewhere nearby, but they’ve prevented all the housing alternatives that would give them that option.”
Mr Tulip also has little time to exclude the family home from the assets test.
“The exemption of the family home from the Age Pension test also exacerbates this [spare bedrooms and empty nest]. It should be removed.”
In a submission to the Productivity Commission inquiry into Australia’s Productivity Performance, Mr Tulip said urban planning was weighted too much in the interests of “old wealthy homeowners”.
“Planning decisions need to stop over-weighting the objections of nearby residents and start respecting the interests of renters and future generations of home buyers,” Mr Tulip said.
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