There are growing fears for the increasing number of Australians who don’t own property they face a very uncertain retirement.
Analysts have told a recent parliamentary inquiry that policies are needed to reverse the trend of declining home ownership rates in the country, particularly among younger and less financial people.
Australians have long considered property ownership as a source of wealth creation, with policies such as negative gearing tax law, but it has meant prices have been driven upwards and unfortunately a growing proportion of the population are being priced out of the market.
CoreLogic’s Eliza Owen was one of the experts to speak at the parliamentary inquiry into housing affordability and supply.
“If you consider policies that preserved high values of homes in order to secure Australian wealth, you have to accept that what comes with that is declining home-ownership for people in lower-income cohorts,” she said.
“And if that’s the case, how do you ensure their retirement? How do you ensure their long-term financial security? A few people have used the word ‘holistic’ in the course of this inquiry. And I think that also includes things like alternatives to building wealth if you’re going to say to a cohort of people: ‘You’ll never be able to own a home.’ ”
Home ownership in Australia peaked several decades ago at just over 70 per cent but has since been in decline.
The Grattan Institute’s Brendan Coates painted a bleak picture for those aged over 40 without a property to their name.
“Anyone who doesn’t own their own home by around 45 is looking at quite a big drop in living standards when they hit retirement,” he said.
Mr Coates said the pension alone was okay to cover living expenses but made life very tough when adding rent on top of that.
“If you own your own home in retirement, you have a very good chance of living a very comfortable retirement. If you are a renter, then given the current structure of our income support system, then you are in, potentially, quite a lot of trouble.”
SQM Research managing director Louis Cristopher also fronted the inquiry and pointed to stamp duty and negative gearing as areas where policy change could be looked at.
“Something can be done there on stamp duty. We are a believer that we should change over from stamp duty, perhaps to a broad-based land tax,” he said.
“We also believe we should consider phasing out negative gearing.”
“Our view is that you need a phase-out period,” he said.
“You don’t do it all in one year, otherwise you could create quite a wave in the market. You take a three-five year view in terms of changing these taxes over.”