Housing affordability is about far more than young people
Much of the public discourse around housing affordability is directed at young people – that generation is known as millennials. They are the generation who keep stealing the media spotlight with their avocado toast and hipster cafes. Housing stress exists outside this demographic though, and it may be time for industry commentators to stop framing these issues as belonging exclusively to Generation Y.
Not just young people
Pensioners who are renting spend between 22 per cent (for couples) and 29 per cent (for singles) of their annual income on housing. Those who own are spending a considerably lower amount of 8 to 15 per cent on home loan repayments. It’s clear that costs are mounting for retirees in rental properties.
A consensus among real estate experts is that households spending 30 per cent or more of their annual income qualify as being under housing stress. According to National Seniors Australia, in January 2017 1 in 4 Australians aged 75 years and older currently suffer from housing stress. This puts them at an equal disadvantage as many of those millennial whippersnappers.
Out with the old
There is some degree of pressure being put on retirees who own their homes. Many industry commentators have taken the view that many retirees own larger houses they no longer need. The idea is that this generation downsizing will free up stock of larger homes for younger families – an area of housing that is short in supply. The issue here is that many of these people don’t want to leave their family homes and the financial pressures of relocating are not within their means.
Retirees have the additional option of moving into a rental property, however, this presents its own series of potential issues. If a couple is unable to secure a long-term lease, they may be required to up and move at the end of their lease term. National Shelter recently stated that 83 per cent of rental properties lease agreements are for 12 months or less. It would be a stressful transition to move from a house you own into a rental, and many older residents would struggle with the lack of security. With National Shelter also claiming that 1 in 5 renters experiencing leaking, flooding or mould issues – for many older Australians this does represent a good alternative to their current living arrangements.
Steps in the right direction
It’s certainly not all bad though. The 2017 Federal Budget introduced a downsizing incentive for retirees. The scheme allows those over the age of 65 to make a non-concessional sacrifice of up to $300,000 from a house sale into their super account.
March saw the release of the 2017 Retirement Affordability Index from retirement specialists Your Life Choices. The index is pushing for reconsideration of retirees as a varied group of individuals. Claiming that many policy makers take a broad brush approach to over 65s by lumping them into groups, and pointing out the subsequent danger – this is where the aforementioned 1 in 4 retirees experiencing housing stress are being let down. The Retirement Affordability Index has identified the most prominent groups in this demographic and hope that in future, due consideration will be made for each.
It’s important to take your living options seriously regardless of your age. Beyond Bank has a range of home loan and financing options that could take the stress out of your housing. Get in contact with us today.