Most Australians are well aware of the challenges facing younger generations when it comes to buying a home. But the truth is that the home ownership dream is slipping – or has already slipped – away from older Australians too.
A report from the Australian Housing and Urban Research Institute (AHURI) says the mortgage debt burden for older Australians has surged 600 per cent over the past three decades. That has made an already precarious financial situation even worse for many, it says.
The report projects that 440,000 older households will be unable to find or afford suitable housing by 2031.
It paints a picture of falling home ownership affordability.
“Over the last 20 years, housing options for older Australians on lower incomes have been getting worse,” it says. “With home ownership rates falling, more people are carrying their mortgage debt into retirement and reduced access to social housing.”
The AHURI report combines the findings of three research projects. Each was designed to address how Australia can deliver the types of housing required for struggling retired individuals.
Housing policy reform needed
While the report highlights several possible solutions, it also puts the spotlight on the constraints that prevent their implementation.
The AHURI believes some of those constraints are unnecessary. It cites the practices of banks and other lenders as potential road blocks. Governments are also accused of dragging their feet on policy reform.
Among the key points delivered in the report, the AHURI says:
- A lack of policy reform and action has resulted in increasing numbers of older people facing their later years living in precarious housing situations.
- Lower income older renters are more open to alternative housing options outside the dominant tenures of home ownership, private rental and social housing.
- Seven composite alternative housing models were developed and tested with lower income households. There was a preference for a shared equity home ownership model, a cooperative housing model and a transportable model.
- A number of new small-scale models of alternative housing provision have emerged. However, provision at scale seems unlikely for the foreseeable future.
- A number of constraints inhibit the supply of innovative forms of housing for lower income older households. These constraints relate specifically to lending practices, costs of development, planning regulations and land supply.
- Older Australians in precarious housing do not always have a complete understanding of the housing options or services available.
Innovation required
The report calls for older Australians’ aspirations to be matched by a more innovative supply of housing to address these points. That would go some way to avoiding “the already significant increase in housing stress and homelessness among older people”.
Circumstances resulting in people not having a stable housing foundation produce an “avoidable individual and community health burden”, it concludes.
Report lead Dr Debbie Faulkner said lending institutions’ preference for traditional shared equity finance models is holding back change. These models stem from the deeply ingrained cultural norm of home ownership in not just banks, but Australians in general.
“The subdued response to the other options we presented indicates people’s long-entrenched aspirations and a lack of familiarity older people have with ‘alternative’ housing options,” Dr Faulkner said.
The full report is available on the AHURI website.
Are you an older Australian struggling to buy a home or maintain your mortgage? Does the government need to do more for those groups? Why not share your thoughts in the comments section below?
Also read: Retirees using reverse mortgages to make ends meet
