Australia’s ageing population may end up priced out of the rental market unless sufficient affordable housing is made available in the future, according to a new study from the Swinburne Institute for Social Research.
The study, “Security in Retirement”, looks in detail at the wealth holdings of men and women at midlife (40–64 years old) and those who have recently retired, and evaluates the degree to which households are financially ready for retirement. According to the study, an increasing number of older people in Australia are experiencing housing insecurity and impoverishment in retirement; predominantly lone person households living in private rental.
An aging rental population
According to the study from the University of Swinburne, there are close to 426,000 individuals over the age of 50 years living alone or with a partner in private rental nationwide. Population projections from the Australian Bureau of Statistics (ABS) suggest that this figure could increase by approximately 42% to 606,340 in 2030, and by approximately 95% to 832,319 by 2050.
With these figures in mind, the study recommends creating an appropriate regulatory environment and encouraging substantial community investment in affordable housing, to provide opportunities to midlife households who may be ineligible for social housing but cannot afford full market price rental housing.
Recommended rental policies
The following policies were recommended by the study to help aged pensioners in the rental market enjoy a similar degree of security in their housing as home-owners:
- Increasing institutional investment in rental housing, using subsidy arrangements such as tax credits to effectively direct investments while minimising housing price inflation, and encouraging property investors to focus on secure, long-term rental yields rather than capital gains.
- Providing an age-specific rental supplement (e.g. $40 per week) to households over 65 years in addition to Commonwealth Rental Assistance (CRA), thus reducing the dependency of many retirees (who often lack opportunities to increase their income) upon the CRA to escape their housing circumstances.
- Introducing a scheme modelled after the now-closed National Rental Affordability Scheme (NRAS), which once provided tax credits to landlords who constructed new houses, and provided a 20% discount on market rent to tenants who met certain income and asset restrictions. The new scheme would be specifically for aged tenants, with housing to be held in the new scheme for longer than the 10 years the NRAS provided for.
Looking beyond the rental market, the study also recommended supporting retirees to become part-owners in their housing, and supporting aged home-owners to better manage the maintenance costs of their housing.
The study also suggests that similar policies around housing rental and ownership could not only benefit mid-life and retiree households, but also be implemented more generally to support Australia’s low to moderate income households as well.
Other areas examined by the study include the impact of key critical life events and the separation of assets on retirement wealth.