Seniors’ Home Ownership is Down: What it Means for Retirement

27 September 2016

In our previous blog post featuring the recent result of the Household, Income, and Labour Dynamics in Australia (HILDA) Survey, I pointed out the decline in home ownership for the 55-64 age group. In a span of 12 years, it has fallen from a high 75.1% in 2002 to only 72.9% in 2014.

This is an alarming trend, because it comes with deep implications for our society, and we will explore this in more detail on today’s post.


House Ownership Decline –  Not Only Among Seniors


The HILDA report reveals that the decline in house ownership is not only happening among Australian seniors. It is evident among all age groups:

  • Only 51.7% of Australians aged 18 and above presently own a home, which has fallen from 57% in 2002. The report says that it is likely in the coming years less than 50% of adults will have their own home.
  • Home ownership also declined for Australians aged 25 to 34, from 38.7% in 2002 to 29.2% in 2014. The decline was most significant between 2010 and 2014.
  • This same trend is also true among Australians aged 35 to 44, house ownership fell from 63.2% to 52.4%, and in Australians aged 45 to 54, where home ownership also declined from 75.6% to 67.4%.
  • As already mentioned above, home ownership among Australians aged 55 to 64 declined from 75.1% to 72.9%.


Let’s focus on the declining home ownership among aged 55 to 64. While the decline is considered slight (2.2%) compared to other age groups, the quantified number is still large. Estimates from the Australian Bureau of Statistics show that there are about 2.5m Australians in this age group. This means there are now about 55,000 additional older Australians without property wealth – and who are forced to rent – than there otherwise would have been. When this cohort is enters retirement, they will likely depend on the aged pension and limited savings to make ends meet.


Why are Less People Owning Property?


There are several key reasons why Australians seem less able to now achieve home ownership:

●    Rising Property Prices

In the last two decades, property prices in Australia have substantially increased, but wages growth has not kept pace. This means the working age group are finding it difficult to not only purchase a home, but also to maintain repayments of the often large loan amounts required to purchase a home in many capital city markets.

●    More Turbulent Jobs Market

The prospect of getting a stable full-time job until retirement day is becoming less common in Australia. Part-time and casual work is becoming more prevalent, and this means people often have less capacity to pay a mortgage during their working life – simply because they don’t have steady income stream.

●    Tendency to Buy Home Much Later in Life

One report from ING reveals that many Australians are now purchasing their first home much later in life. Some are even waiting to buy their home until retirement when they have accumulated enough wealth to do so.


Disadvantages of Declining Home Ownership for Retirees – and Society


Seniors who don’t own property could be in a vulnerable future position, especially as the Federal government is targeting budget cuts to welfare.

Greater Reliance on Aged Pension

When most people retire, they experience a reduction in disposable income. The transition to living on the aged pension or superannuation is tough, but at least for home owners they have the additional option to release equity via a Reverse Mortgage. This option to access more funds will be denied to more people as home ownership declines, placing even more dependence on the aged pension.

More Public Housing

Current trends indicate a continued increase in the number of long-term renters who are welfare dependent. As members of this cohort retire, more and more people will be forced to seek welfare accommodation from public housing programs offered by the Government.

Higher Expense for the Government

If significantly fewer seniors are able to build their own wealth through property ownership, it will necessarily place a greater financial burden on the government as perhaps millions of additional welfare funds are used to house and support the elderly.

If you are fortunate enough to own a home, a Heartland Seniors Finance Reverse Mortgage can help you unlock equity within this asset and remain in the comfort of your own home. You can use the cash for your extra income, as well as for other purposes such as paying for a dream holiday, upgrading your home, purchasing a car, and more.

If you would like to talk about how a reverse mortgage can help you live a better retirement, please feel free to call our friendly team on 1300 889 338. Alternatively, if you wish to learn more about why Australian Seniors are releasing home equity, and how it can also change your life, please feel free to request a complimentary copy of Reverse Mortgage Insights. We are here to help you.

Regards, Andrew

Information provided is accurate as at 27 September 2016 and may change from time to time