According to a new report commissioned by the Australian Institute of Superannuation Trustees (AIST), the rate of home ownership in Australia is declining so fast that it threatens to undermine the superannuation system.
The report, No Place Like Home: The Impact of Declining Home Ownership on Retirement, was commissioned by the AIST and written by economist Saul Eslake.
The rate of home ownership in Australia has declined to around 58 per cent after a peak of 73 per cent in the mid-1960s. More than half of this decline has occurred since 2001. Furthermore, the number of home owners who own their homes outright declined from 61.7 per cent in 1996 to 47.9 per cent in 2011.
The report suggests that a threat to superannuation exists due to the fact that the system was built around the assumption that the “overwhelming majority” of retirees would not have housing costs in retirement.
According to the report: ‘Not only do the emerging trends in Australia’s housing market spell trouble for those who will be entering retirement over the next three or four decades: they also spell trouble for Australia’s public finances and for the governments who will preside over them.’
‘These prospects should encourage Australia’s current generation of political leaders to give more thought to what can and should be done to ameliorate or reverse the long-term decline in home ownership rates among people currently aged between their mid-20s and their mid-50s.’
The report recommends that the Government should abolish or modify negative gearing and the capital gains tax discount. It also recommends tightening the rules for foreign investors; state governments to exempt pensioners from stamp duty when downsizing, and for regulators to force the reduction in growth of lending to property investors.
Read more at theguardian.com